Consumer confidence in the United States plunged to its second-lowest level on record in November 2025, even as artificial intelligence and unexpected fiscal stimulus began to prop up growth elsewhere. The Conference Board reported a 4.9% monthly drop in consumer sentiment—the steepest in nearly two years—while the European Commission and IMF painted a more resilient, if uneven, global picture. It’s a paradox: households are bracing for hardship, yet the economy keeps humming, powered by machines, not just people.

Consumer Confidence Hits a Wall

The Conference Board’s November 2025 survey showed the index of consumer sentiment falling to 52.3, down from 54.9 in October and a staggering 29% below November 2024 levels. The sub-index tracking current conditions collapsed by 12.8%, suggesting Americans aren’t just worried—they’re feeling it. Paychecks aren’t stretching far enough. Grocery bills are stubborn. And the ghost of 2022’s inflation spike still lingers in memory. Yet, oddly, expectations for the future edged up 1.4%. That’s not optimism. It’s resignation with a flicker of hope.

Meanwhile, the S&P Global PMI data told a different story. The manufacturing index slipped to 51.9—its lowest in four months—but services surged to 55.0, a four-month high. Composite PMI hit 54.8, pointing to annualized GDP growth near 2.5% in Q4. “Hopes for further interest rate cuts and the ending of the government shutdown have boosted optimism,” noted S&P analysts. Translation: Wall Street’s cheering, Main Street is sighing.

Global Growth: A Tale of Two Forecasts

The European Commission released its Autumn 2025 Economic Forecast from Brussels, projecting global growth at 3.4% for both 2025 and 2026, even nudging up to 3.5% in 2027. That’s higher than its spring forecast. Why? Trade frontloading, stronger-than-expected Chinese stimulus, and a surprisingly resilient U.S. economy. Japan’s $135 billion fiscal package—half tax cuts, a third aimed at semiconductors and AI—helped too.

But the World Bank didn’t buy it. In its Global Economic Prospects report, it slashed its 2025 forecast to just 2.3%, calling it a “significant downgrade.” The Swiss Re Institute split the difference: 2.5% growth in 2026, 2.6% in 2027, with the U.S. no longer pulling away from the pack as it once did.

It’s not just numbers. It’s direction. The IMF noted that while global uncertainty hit a record high in November—driven by wars, tariffs, and supply chain chaos—economic sentiment remains “relatively upbeat.” How? Because emerging markets adapted. Businesses learned to pivot. Policy makers, especially in Asia and Latin America, acted faster than in past crises.

China’s Slowdown, America’s Edge, and the AI Wildcard

China’s economy, once the engine of global growth, is sputtering. The Conference Board’s Leading Economic Index for China fell in October. Exports are under pressure from U.S. tariffs—over 20% on average for many goods. That’s forcing Chinese manufacturers to reroute shipments to the EU, which the European Commission warns could strain European supply chains and inflate prices.

Meanwhile, the U.S. remains the outlier. Services are booming. AI investment is surging. The S&P Global Ratings report titled “AI Tailwinds Boost Otherwise Weak Growth” called artificial intelligence the single biggest growth catalyst in 2026. From logistics to legal research to healthcare diagnostics, AI is cutting costs and boosting productivity—not just in Silicon Valley, but in factories in Ohio and call centers in Texas.

Japan’s $135 billion push into AI and semiconductors isn’t just about jobs. It’s a bet that the next wave of global competitiveness won’t be won by cheap labor, but by smart machines. Even Germany’s LEI ticked down in September, signaling Europe’s lagging behind.

Geopolitics: The Shadow Over Growth

You can’t talk about the global economy without talking about war. The European Commission explicitly cited Russia’s war in Ukraine as a drag on neighboring economies, especially in Eastern Europe. Energy prices still wobble. Insurance costs climb. The October 2025 Gaza peace plan offered a rare glimmer of hope—but it’s fragile. One misstep, and regional instability could spike oil prices again.

Trade policy uncertainty? At record levels. Tariffs aren’t just taxes. They’re taxes on efficiency. They force companies to rebuild supply chains from scratch, wasting capital and time. The European Commission warned the real economic cost may be “greater than expected,” especially for EU exporters caught in the crossfire.

What Comes Next?

The next 12 months will hinge on three things: interest rate decisions by the Federal Reserve, whether China’s stimulus can reignite domestic demand, and how fast AI adoption scales beyond pilot programs. The IMF suggests elevated uncertainty may be the new normal—but resilience is becoming institutionalized.

Markets are pricing in rate cuts by mid-2026. But if inflation sticks, those cuts won’t come. And if consumers keep pulling back, even AI can’t save a spending slump. The world isn’t collapsing. But it’s not soaring either. It’s limping forward—with one foot in fear, the other in innovation.

Frequently Asked Questions

Why is U.S. consumer sentiment so low if the economy is still growing?

Consumer sentiment reflects psychological stress, not just economic data. While services and AI-driven sectors are thriving, households are still reeling from high housing costs, stagnant wage growth, and persistent inflation in essentials like food and healthcare. The Conference Board’s current conditions index fell 12.8% month-over-month, showing people feel worse off—even if GDP numbers look okay.

How is AI really boosting global growth?

AI isn’t replacing workers—it’s augmenting them. In logistics, AI cuts delivery times by 18%. In healthcare, it reduces diagnostic errors by 30%. According to S&P Global Ratings, AI could add 0.8% to global GDP annually by 2027. The biggest gains are in the U.S., Japan, and South Korea, where firms have invested heavily in infrastructure and talent, turning automation into productivity.

Why do forecasts from the World Bank and European Commission differ so much?

The World Bank uses a more conservative model that weights trade disruptions and debt levels heavily, especially in emerging markets. The European Commission factors in trade frontloading and fiscal stimulus effects that haven’t fully played out yet. The gap reflects different assumptions: one sees fragility, the other sees momentum.

What’s the risk of trade wars escalating in 2026?

The risk is high. The U.S. has tariffs on over $360 billion in Chinese goods, and China has retaliated with non-tariff barriers on U.S. agriculture and tech. The European Commission warns that if the U.S. imposes new tariffs on EVs or semiconductors, EU exporters could be collateral damage as supply chains reroute. A 5% increase in global trade barriers could shave 0.7% off global GDP by 2027.

Is the U.S. dollar’s strength a problem for the global economy?

Yes. The dollar’s strength, fueled by higher U.S. interest rates and safe-haven demand, makes it harder for emerging markets to repay dollar-denominated debt. Countries like Argentina, Turkey, and Ghana are under pressure. The IMF flagged this as a key vulnerability. If the Fed delays rate cuts, the dollar could keep rising—triggering currency crises abroad and reducing global demand for U.S. exports.

What role does Japan’s $135 billion stimulus play in the global outlook?

Japan’s move is a strategic pivot. Half the package targets tax relief for households, easing inflation pain. A third goes to semiconductors, AI, and shipbuilding—industries where Japan still leads. This isn’t just domestic support; it’s an attempt to reclaim global tech leadership. If successful, it could reduce reliance on U.S. and Chinese tech, creating a more balanced global innovation ecosystem.