Economic frustration set to boil over in midterm elections
The U.S. economy is booming. But American consumers have never been more pessimistic. Economists blame tariffs and the war with Iran.
Consumer sentiment hits all-time low as Americans head to the polls
Peter Armstrong · CBC News
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American voters are headed to the polls for the U.S. midterms this week. Most are angry and frustrated about the state of the economy and the way Donald Trump has managed it.
If you want evidence of that dissatisfaction look no further than the University of Michigan's Index of Consumer Sentiment.
It shows consumer confidence is plummetting under Trump.
"Only three times since the 1970s have more than half of Americans said their government's doing bad job managing the economy. Right now it's at 74 per cent," said Kathryn Anne Edwards, a labour economist and policy consultant in Houston.
The index gauges consumer sentiment. It is lower today than it was during the toughest recessions in the 1980s or even the financial crisis in 2008-09.
And she says that survey is one of the biggest and longest standing bodies of economic data in the country. It's been going on since the 1940s. And it's been a monthly survey since 1978.
Edwards says these kinds of numbers show that on some fundamental level, the U.S. economy is failing American households.
"It's so completely unprecedented. It's really hard to put into words," said Edwards.
Those kind of plunges in consumer sentiment historically only happen in the deepest and darkest days of a recession.
And that's what's odd.
The U.S. economy is nowhere near a recession.
The latest GDP numbers out of Washington show the U.S. economy is the fastest growing economy in the Western world.
American GDP expanded by 3.8 per cent in the quarter running from July to September. (By comparison, Canada is on track for about a third of that growth.)
Retail sales were up. Investment in AI continues to churn ever higher. And stock markets are at an all-time high.
"GDP is growing above trend, consumer spending remains robust, layoffs trudge along at ultra-low levels, and we've seen a stable unemployment rate over the past year," wrote RBC's team of economists Mike Reid, Carrie Freestone and Imri Haggin.
But if the macro data is so good, why are voters so angry?
"For many voters, the economy is now synonymous with inflation, as rising prices outweigh job reports, housing affordability and stock market performance," wrote Francis Généreux, lead economist at Desjardins Group in a note to clients.
And those rising prices have been driven by two main things; tariffs and the U.S.-led war with Iran.
Gas prices shot up the day the war began. They have bounced around a little as talk of various ceasefires and deals come and go, but American drivers are paying far more at the pumps today than they were a year ago.
And gasoline prices are posted everywhere as drivers and pedestrians alike move through a neighbourhood. So even if you ride a bicycle to work, the increase in prices is incredibly hard to ignore.
Inflation in the U.S. has ticked up to 3.7 per cent, and economists warn it's not done climbing yet.
Yes, much of that increase is due to energy costs. But tariffs have contributed as well.
A recent report from the New York Federal Reserve found the cost of many everyday items would have declined last year were it not for Trump's tariffs.
Researchers looked at the 12-month change in consumer goods prices going back to the peak of the COVID-era surge in inflation. They showed price growth was still falling in 2024 and reversed in 2025.
"Our estimates attribute this increase to the tariffs: by February 2026, tariffs had contributed 2.9 percentage points to goods price inflation, and without them goods prices would have fallen slightly," wrote Mary Amiti, Sebastian Heise and David E. Weinstein.
And Edwards says voters have followed the Trump administration's policy decisions and how they drive prices. She says there are two sharp drops in the consumer sentiment index. One when tariffs were introduced and the other when the war with Iran began.
"Americans get it. Tariffs have made their lives more expensive," she said.
And Americans will take that knowledge into the polling booth this week. If the polls hold, the midterms could lead to sweeping changes in the formation of Congress and who holds power on Capitol Hill.
But whether those newly elected Senate and House members actually take action to lower tariffs for Canadians is a different question altogether.
ABOUT THE AUTHOR
Peter Armstrong is the CBC's senior business correspondent. He was a foreign correspondent and a parliamentary reporter for CBC News. Peter hosted the business program On the Money and World Report on CBC Radio. He is the author of the CBC newsletter Mind Your Business
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