Recent volatility in the economy and the stock market, driven by tariffs and mass layoffs, has led to a plunge in consumer confidence. In fact, consumers feel over 9% less confident about their financial outlook this month than they did one year ago, according to the latest WalletHub Economic Index, released today. While this is the seventh-sharpest yearly drop in consumer confidence recorded since December 2020, consumer sentiment is only at its 18th-lowest point in the past five years.
“People who have low financial confidence are likely to spend less money, make fewer large purchases, and pay down less debt than people with high confidence. As a result, when consumer sentiment experiences a significant decrease, that is negative for the economy.” – Chip Lupo, WalletHub Analyst
Xiaoqing Eleanor Xu, Ph.D., CFA, professor; Co-Director, Master of Financial Technology and Analytics, Seton Hall University, outlined a handful of reasons consumer confidences is down, including, “While high-income groups reap the rewards of a stock market boom, lower-income groups feel squeezed by high consumer prices and heavy interest burden on consumer debt. Finally, broad uncertainty acts as a negative drag, as concerns over tariff policy, geopolitical risks, government shutdowns, and high borrowing costs collectively eroded consumer confidence.”
Patrick Bernet, associate professor at Florida Atlantic University, listed job stress, health insurance stress, showing stress, consumer debt, inflation, tariffs and more as reasons for the decline in consumer confidence. “With all of these stresses, consumers are worried and do not have a sense that the economy is moving in a good direction. As a result, consumers tend to save more in these situations.”
The WalletHub Economic Index is based on a monthly survey that evaluates economic prospects based on 10 components of consumer sentiment. These components revolve around how people feel about their finances, purchasing plans and employment opportunities.
Key Stats
- Real estate popularity decline: Home-buying interest among consumers decreased by almost 18% in October 2025 compared to last year, marking the fourth-sharpest decline in interest on record since December 2020.
- Decreasing interest in auto purchases: The share of consumers who expect to buy a car in the next six months is nearly 17% lower in October 2025 compared to last year. This is the fourth-highest drop in auto interest recorded since December 2020.
- Weaker sense of job security: People’s confidence in having a job in the next six months is almost 10% lower in October 2025 compared to last year. This is the second-highest drop in the level of job security sentiment registered since December 2020.
- Less new employment opportunities: The share of consumers who feel new employment opportunities are “abundant” is over 7% lower in October 2025 compared to last year.
Large purchases are not a priority: In October 2025, consumers’ likelihood of making a large purchase in the next six months is roughly 6% lower than it was last year.
The complete WalletHub Economic Index results can be found at:
https://wallethub.com/edu/wallethub-economic-index/91926