Americans Haven't Felt This Bad About the Economy for a Decade — What Changed?
Something feels wrong in America, and nobody can say what it is.
Americans traditionally sour on the economy when the country is in a recession and unemployment is high. Neither of those is true in 2026. Yet, data from the Conference Board's September Consumer Confidence Survey shows that Americans feel the least confident in the economy in more than 12 years, with drops registering regardless of political affiliation.
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Prices Are Still Putting Pressure on Household Budgets
The inflation rate has fallen dramatically from its peak of over 9% in 2022, but that doesn’t mean that prices have gone back down. While the rate of inflation has slowed, actual prices continue to rise. Overall, consumers are paying much more than they did several years ago.
The Bureau of Labor Statistics reported that consumer prices were 3.4% higher in August 2026 than a year earlier. Energy prices jumped 16.3% over that period, while food prices climbed 2.7%.
While the headline number appears to be manageable, especially for food prices, consumers are still reeling from the post-COVID spike in overall costs. This is why household sentiment can seem disconnected from the current economic reality.
Data from the University of Michigan's September consumer survey found that concerns about high prices continued to climb. Views of both current personal finances and expected finances one year from now weakened, on both a monthly and yearly basis.
Borrowing Money Is Expensive Again
The short window of low interest rates surrounding the pandemic seems like a distant memory to those looking to borrow money in the current environment.
The average rate on a 30-year fixed mortgage, for example, reached 7.4% as of Oct. 8, according to Freddie Mac. Just a few years ago, borrowers were taking out 30-year loans for less than 3%, and more than half still have mortgages below 4%, according to Redfin.
Consumers carrying credit card debt or taking out other variable-rate loans are also feeling the pinch from higher market interest rates.
In that type of higher-rate environment, even a household with a sizable, predictable income may still struggle to make major purchases or even to make ends meet.
The Job Market Is Making People Nervous
America’s not in a recession, and jobs are still being created. But things do appear to be slowing down, and consumers are getting a bit edgy.
The Conference Board found that 23.6% of consumers said jobs were "plentiful" in September, down from 24.5% in August. Meanwhile, 21.9% said jobs were "hard to get," up from 20.3%.
The September jobs report, recently released by the Bureau of Labor Statistics, showed that employers added just 29,000 jobs in September. The unemployment rate remained at 4.2%, but job growth was weak.
In an economy saddled with higher costs and interest rates, a downtick in the labor market can make households more cautious about taking on new debt or making expensive purchases. Some may even hunker down and boost their emergency funds to counter the fear of job loss. All of these activities can lead to lower consumer confidence.
The Economy Isn’t Collapsing
Although some consumers have had to tighten their belts, not every economic indicator is flashing red. Per the Bureau of Economic Analysis, consumer spending actually rose by 0.9% in August, indicating Americans still have some purchasing power. Unemployment still remains relatively low as well.
Overall, macroeconomic data doesn’t yet indicate a collapsing economy. But on a micro level, the highest costs for everyday goods and the rising rates for home mortgages and car loans are squeezing many Americans financially.
Editor’s note on political coverage: MoneyLion is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on MoneyLion.com.
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