October CRU: Consumer Confidence, Wealth, and What's Ahead

As we approach the midterm elections, voters are unhappy. Overall consumer prices rose 3.7 percent last month from a year ago, driven largely by a spike in energy costs stemming from the war with Iran. The surge in inflation has undermined the purchasing power of workers’ hourly earnings – Americans, on average, have experienced about zero wage growth in inflation-adjusted terms since the president returned to the White House last January. Perhaps it’s no surprise that the University of Michigan consumer sentiment index this month reached its second-lowest level in history.

You’d be wrong, however, to think that consumers have reduced spending during these uncertain times. As is common during periods of low unemployment, consumers have continued to spend and borrow. Maybe the disconnect between voters’ dour survey responses and their spending can be explained by political messaging that is insufficiently positive (as argued by both Biden and Trump).

Not so fast.

A recently released study showed that the typical American family got a little wealthier in the years following the COVID pandemic, but the gains were not shared evenly. 

The Federal Reserve’s Survey of Consumer Finances comes out every three years and is considered the gold standard for measuring household “wealth” – a family’s assets, like stocks and home equity, minus its liabilities, like mortgages and credit-card debt.

Median family net worth rose 2% from 2022 to 2025, a marked slowdown from the prior period (2019 to 2022), when wealth increased 37% (the most in the history of the survey, due to rising stock and home prices). Median wealth for a family in the top 10% of earners increased 31%, while wealth decreased for the bottom 40% of earners. Wealth increased 37% for Americans 75 and older, while it declined 23% for people under 35. Median net worth for people without a high-school diploma fell by 55%, the largest percentage decline for the group in the survey’s history.

So, a significant portion of our population is falling backward, not just relative to others, but in absolute wealth and security (a growing number of families also report being behind on loan payments). To the extent political views of voters under financial pressure tend to be divisive and obstructionist (no data centers in my county/state), the value of the protections of the constitution and the separation of federal powers can seem abstract compared to the potential benefit of direct intervention by the executive branch.

These midterm elections will therefore likely have an outsized impact on the economy and Corporate America in the near-term

Disclaimer: The information provided is for educational purposes only and is not intended as investment advice. Past performance does not guarantee future results. Investors should consult with a qualified financial professional before making any investment decisions.