Happiness Index Tanks as US Consumer Sentiment Hits Record Lows

Goldman Sachs economists are pointing to declining happiness and trust in institutions as key drivers of persistent weakness in U.S. consumer sentiment.

According to Goldman Sachs economist Joseph Briggs, a broader decline in happiness is weighing on confidence readings, rather than household finances alone.

The University of Michigan's consumer sentiment index fell 13% year over year in September 2024 and by almost 8% from August.

Data from the University of Chicago's General Social Survey shows that only 23% of respondents are 'very happy' in 2024, down from 31% in 2016, while 'not too happy' responses rise to 20% from 13% over the same period.

Briggs argues that declining happiness and trust in institutions, rather than economic factors, are driving lower sentiment, potentially reducing the indicator's reliability for forecasting economic trends.