Wealth Divide and Job Fears Plunge Consumer Confidence to Crisis Levels

US consumer sentiment plummeted to near-historic lows in November, with the final index reading at 51, a sharp decline from 53.6 in October, according to the University of Michigan's survey. This marks one of the lowest levels on record, driven by worsening perceptions of personal finances and inflation concerns. The current conditions component of the index hit a record low of 51.1, the dimmest outlook since the 2009 financial crisis. Joanne Hsu, director of the survey, attributed the drop to persistent high prices and weakening incomes, noting that consumers expect annual inflation to remain at 4.5% over the next year and 3.4% over the following five to ten years.

The survey also highlighted a stark divide between wealthier consumers and those with lower incomes. While affluent individuals appear to maintain spending power, non-stockholders face deteriorating financial positions, underscoring vulnerabilities often masked by broader economic metrics according to the University of Michigan's survey. Job security concerns further exacerbated the decline, with the probability of personal job loss rising to the highest level since July 2020. This trend aligns with a four-year high in continuing unemployment claims, signaling challenges in re-employment for jobless Americans.

Meanwhile, market reactions to economic uncertainty were evident in unrelated sectors. Mawson Infrastructure Group Inc. (NASDAQ:MIGI) saw its stock drop 28.5% after announcing a 1-for-20 reverse stock split to regain Nasdaq compliance. The move, approved by shareholders, aims to boost the company's per-share price and align with listing requirements. While the split does not alter ownership percentages, it reflects broader investor anxiety amid a volatile economic landscape.

The University of Michigan report also noted that consumers grew slightly more pessimistic about near-term economic prospects, despite the resolution of the longest government shutdown in U.S. history. Buying conditions for major purchases reached record lows, indicating a cautious approach to spending. These trends suggest that while inflationary pressures have eased somewhat, the cost-of-living crisis and job market fragility continue to weigh heavily on household confidence.