Consumer pessimism hits 61% as Trump's economic approval sinks to 33%

Despite a surging stock market and lower gasoline prices, 61% of Americans are pessimistic about the economy — the highest share since December 2023 — while just 25% express optimism, the CNBC All-America Economic Survey found.

"More voters expect things to get worse by a 41% to 29% margin, leaving the electorate in a distinctly sour mood heading into the midterm election cycle," said Micah Roberts, partner at Public Opinion Strategies, the Republican pollster for the survey.

The pessimism spans both the current state and the outlook, with 47% of respondents reporting they have cut back on essential items such as food and medical care — up 6 percentage points from April. Two-thirds are reducing spending on non-essentials like dining out and entertainment, a 5-point increase. The belt-tightening is most acute among lower-income households: 60% of those earning below $30,000 are reducing essentials, compared with 35% of those earning above $100,000.

The disconnect between consumer sentiment and financial markets — the S&P 500 has continued to trade near record levels — poses a risk to the economic expansion. Consumer spending accounts for roughly two-thirds of U.S. GDP, and sustained pessimism could eventually translate into weaker retail sales and slower growth heading into the midterm elections in November.

Trump's approval rating stands at 40% in the CNBC survey and 37% in a separate Washington Post-Ipsos poll conducted July 8-13 — unchanged from earlier this year and on par with the low point of his first term after the Jan. 6, 2021, Capitol attack. His handling of the economy draws disapproval from 60% of respondents in the CNBC survey, while 68% disapprove of his approach to inflation and the cost of living.

The Washington Post-Ipsos survey, which polled 2,648 adults nationwide with a margin of error of plus or minus 1.9 percentage points, found that 43% of Americans say they are "not as well off" as when Trump returned to office — a 12-point increase since February. During Trump's first term in 2018, only 13% said they were worse off than when he began.

"People are still paying a lot more for stuff than they were a year and a half ago, two years ago, and that's recent enough in memory that it still hurts and it still drives a lot of anger," said Jay Campbell, partner at Hart Research, the Democratic pollster for the survey.

Iran War Drags on Approval

The conflict with Iran has become a growing liability. Just 48% of Americans believe the military action is worth it to disrupt Iran's nuclear program, down from 53% in April, according to the CNBC survey. The Washington Post-Ipsos poll puts the figure even lower at 28%, with 68% saying the war has not been worth fighting — worse than any Post-ABC News poll rating during the Iraq War.

Trump's approval on handling Iran stands at 35% in the CNBC survey and 29% in the Post-Ipsos poll. The issue has exposed fractures within his own party: 86% of self-described MAGA Republicans approve of his Iran policy, but that drops to 47% among non-MAGA Republicans, the CNBC survey found.

Gasoline prices have fallen to a national average of $3.89 from a peak of $4.56 in May, according to AAA, but remain well above the $2.93 level before the U.S. and Israel launched strikes on Iran in February. Two-thirds of Americans say groceries are unaffordable, up from 45% before the war, the Post-Ipsos survey found.

Midterm Race Tight Despite Voter Anger

Despite the broad dissatisfaction, Democrats hold only a 4-point advantage over Republicans on congressional preference — unchanged from April. The CNBC survey found that 57% of voters say they would be unlikely to support a self-described MAGA candidate, while 50% say the same about a candidate endorsed by Trump. Democratic Socialist candidates fare slightly better, with 50% saying they would be unlikely to support one.

The cost of food and groceries ranks as the most important issue for voters, followed by protecting democracy and immigration. Republicans hold a 22-point advantage on immigration and border security — their largest lead on any issue — while Democrats lead by 7 points on food costs and 18 points on health care costs.

The disconnect between sour consumer sentiment and resilient financial markets may persist through the midterms, but the surveys show voters are increasingly linking their personal financial strain to the president's policies — a dynamic that historically has weighed on the incumbent party.

This article is for informational purposes only and does not constitute investment advice.