American Consumers Sour on Trump’s Economy as Health Care Costs Climb

American Consumers Sour on Trump’s Economy as Health Care Costs Climb

Consumer sentiment dropped for the third straight month in October as rising health care costs deliver a fresh fright. Americans across the country are already getting hit with notices announcing that their insurance premiums will spike in the new year. Millions more will see their health care costs double when the Affordable Care Act (ACA) open enrollment period begins on November 1, as tax credits to lower Affordable Care Act marketplace premiums are set to expire at the end of the year. Meanwhile, Republicans in Congress double down on their refusal to take action to lower costs for hardworking families by leaving town while the government remains shut down.

Although the government shutdown has delayed official economic indicators, unofficial private sector data underscores the economic reality haunting American families. Bank of America reports rising unemployment among its customers, the Carlyle Group says job growth slipped again in September, and Goldman Sachs finds the labor market back to 2015 levels. Under Trump, consumer optimism is collapsing right alongside the job market – and workers are paying the price.

Elizabeth Pancotti, Managing Director of Policy and Advocacy at Groundwork Collaborative, shared her reaction:

“Trump’s economy is turning household budgets into a horror show. Republicans in Congress have the power to help America’s working class, but they are choosing to keep the government shutdown and health care costs high.”

This week in the Trump Slump, new polling and economic indicators continue to show that Trump’s shutdown and economic policies are deeply unpopular, damaging the economy, and hitting American workers hardest.

Polling and Economic Indicators on Trump’s Handling of the Economy:

• Consumers show pessimism about future economic conditions. The University of Michigan’s Index of Consumer Sentiment fell slightly in October, dropping from 55.1 in September to 55.0, extending the longest streak of readings under 60 in more than a decade. Future expectations fell more than expected, showing that Americans are increasingly anxious about their financial future and see fewer reasons for optimism as economic conditions worsen.

• Consumers’ outlook is worsening. The New York Fed’s latest Survey of Consumer Expectations underscores growing unease across prices, jobs, and household finances—mirroring the broader deterioration in consumer sentiment.
  • Consumers expect prices to rise faster. Inflation expectations climbed to 3.4 percent for the year ahead and 3.0 percent over five years. The jump was sharpest among lower-income households and those with less education. Consumers also foresee steeper price increases for essentials like food, gas, rent, and medical care, with expected food inflation reaching its highest level since early 2023.
  • Consumers are growing more worried about jobs and income. Expected earnings growth slipped to 2.4 percent—the lowest since 2021—while the perceived likelihood of job loss rose to 14.9 percent. More than four in ten now expect unemployment to be higher a year from now, suggesting households are bracing for a softer labor market.
  • Consumers are cutting back on spending. Expected household spending growth fell to 4.7 percent, below the 12-month average, as families tighten budgets. Income expectations were flat at 2.9 percent, meaning consumers see little relief from pay raises even as prices continue to rise.

• The job market has hit a wall. The U.S. Labor Department was supposed to release its September jobs report on October 3, but the government shutdown has delayed the release. Economists had expected the report to show that the economy added about 54,000 jobs in September.  But according to Carlyle’s estimate, only around 17,000 jobs were actually created. Which would mark one of the weakest months for job growth since 2020.

• Businesses are hitting the brakes. Over 80% of businesses surveyed by KPMG said that they have paused hiring or laid off workers over the last five months due to economic uncertainty from Trump’s tariffs.
  • Additionally, 44% of businesses have already passed on the tariff costs by increasing prices.

• Americans see what Trump won’t admit. 74% of Americans describe current economic conditions as only fair or poor. That includes 56% of Republicans and 90% of Democrats, a new Pew Research Center report found.
  • More than half of Americans say that Trump’s economic policies have made economic conditions worse and 46% expect economic conditions to be worse a year from now.
  • 65% of U.S. adults say they are very concerned about the price of food and consumer goods, and nearly as many (61%) express this level of concern about the cost of housing today.

• Americans are demanding relief, not chaos. 57% of Americans say that preventing big increases in the cost of health insurance is an essential priority in resolving the shutdown, Hart Research found. This is a concern that cuts across the political spectrum.
  • Additionally, 54% of Americans say that President Trump and Republicans in Congress are not focused on lowering the cost of living, according to new polling from Data For Progress. The same poll found that 69% of Americans are concerned about health insurance premiums rising this year.

Additional Indicators:

• Consumers are pulling back. In another sign of caution, New Federal Reserve data shows Americans cut back on credit card use in August. Balances are down 2.5% over the past 12 months – the first sustained decline in credit-card usage outside of the pandemic since the Great Recession.

• Americans are bracing for a tighter holiday season. Online holiday spending growth is set to slow to 5.3% according to an Adobe Analytics report. That growth would be slower than last year’s holiday spending growth, when online sales rose 8.7%, and it would also be below the 10-year average of roughly 13% annually.
  • Concerns about higher prices from tariffs and dipping consumer confidence have complicated the outlook for the critical shopping season.

Expert Commentary:

• Chief economist at Moody’s Analytics Mark Zandi warned of the effects from delays in releasing government data: “The bottom line is that not having the BLS jobs data is a serious problem for assessing the health of the economy and making good policy decisions. But the private sources of jobs data are admirably filling the information gap, at least for now. And this data shows that the job market is weak and getting weaker.”

• Former deputy director at the National Economic Council Daniel Hornung explained what will happen if ACA credits are not renewed: “These credits are set to expire at the end of the year, and part of the issue around the shutdown right now is that folks will start getting notifications as soon as November 1st from their insurance company telling them that their insurance premiums are going to go up. And so part of the fight right now is saying, ‘Can we try to extend those tax credits before that November 1st deadline’ so that people don’t get those letters in the mail saying, that their insurance premiums could go up anywhere between a few hundred dollars for a single person all the way up to about a thousand dollars a month for a family of four.”

• Executive Director at Groundwork Collaborative Lindsay Owens explained why the American Dream is out of reach for many young adults: “Today’s young adults are being squeezed from every direction. Rent and mortgages are increasingly out of reach, student loan payments swallow much of their paychecks, and corporate profiteering has pushed prices even higher on top of already punishing inflation. For Gen Z, these barriers are especially steep.”

• The New York Times Editorial Board wrote that Trump’s policies are contributing to the rise in Americans’ energy bills: “Mr. Trump is going after clean energy, and Americans will face higher bills as a result […] Mr. Trump ran for president promising to reduce the cost of living and of energy prices in particular. He has failed so far. Inflation remains near 3 percent a year even as economic growth and job growth have slowed. Electricity prices are almost 10 percent higher than they were a year earlier, according to the most recent numbers.