Post-Pandemic Gloom Persists as Economic Indicators Diverge
Six years after the COVID-19 pandemic, Americans remain gloomy, and monthly economic reports aren't lifting their spirits. Despite the economy and jobs market recovering, consumer sentiment hasn't returned to pre-pandemic levels, according to the University of Michigan Consumer Sentiment Index and the Conference Board's Consumer Confidence Index, which dropped in September.
The disconnect between how people feel and the economy's strength is a post-pandemic mystery. Historically, consumer sentiment has been a reliable indicator of economic direction, but economists like Chicago Federal Reserve President Austan Goolsbee are now focusing on objective data like inflation, spending, hiring, and economic growth.
Recent statistics show resilience. The Fed's preferred inflation gauge, the personal consumption expenditures price index, indicated stable price increases and strong consumer spending. August saw a 0.9% surge in spending, with a 0.6% increase even after adjusting for inflation, the strongest monthly gain since March 2025. Bank of America noted that Americans are spending on discretionary items, not just necessities.
The Labor Department's jobs report showed September payroll growth softened, but economists attributed this to a “low hire, low fire” situation rather than widespread layoffs. Ken Mahoney, CEO at Mahoney Asset Management, suggested that firms have already right-sized and AI may be affecting hiring. The 12-month average job gain was about 45,000, fitting a slow trend rather than economic decline.
Goolsbee emphasized that while consumer sentiment is less useful as a leading indicator, deeper analysis of survey distributions and inflation expectations could provide valuable insights. He noted that understanding spending patterns among specific groups could impact GDP growth and employment.