Goldman Blames Falling Happiness for Slumping Sentiment — SkimNews
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- Goldman Sachs economist Joseph Briggs told clients that low reported economic sentiment likely reflects "a more fundamental, downbeat assessment of the state of the world rather than the economy."
- The University of Michigan consumer sentiment index fell 13% year over year in September, including an 8% drop from August alone, hitting record lows.
- University of Chicago General Social Survey data shows the share of respondents feeling "very happy" dropped to 23% in 2024 from 31% in 2016, while "not too happy" responses rose from 13% to 20%.
- Briggs' analysis of the same survey found overall happiness saw a sharper decline than the perception of financial satisfaction, suggesting sentiment is decoupling from material conditions.
- Joanne Hsu, director of the Michigan survey, told CNBC the sentiment downtrend mirrors readings showing both decreasing happiness and declining trust in public institutions.
- Briggs found lower institutional trust caused a "disproportionate amount" of the decline in net happiness in recent years, and warned consumer sentiment could become a less useful predictor of economic dynamics if it continues decoupling from the actual economy.
Why it matters: If consumer sentiment is pulled by non-economic factors like happiness and institutional trust rather than GDP and jobs, the Michigan index—a closely watched indicator—risks losing its value as a gauge of real consumer behavior. Briggs' analysis challenges the conventional reading that sentiment tracks the economy itself, potentially leaving policymakers and investors relying on a signal that no longer reflects household reality.
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