If you own stocks, you feel better about your financial situation than if you don’t.

That was the not-exactly-epiphanal takeaway from the preliminary read on University of Michigan sentiment for October.

Frankly, the readout could’ve been worse. Not that it was good. It wasn’t. It was quite poor. Headline sentiment printed 55, down from last month, the third decline in a row and 22% lower YoY.

As the figure reminds you, Donald Trump’s tariffs are an albatross. Sentiment collapsed during the rollout and after a fleeting recovery, slumped again.

Current readings on the Michigan headline aren’t materially different from the record lows seen when headline inflation in the US was running 9% midway through 2022. The expectations gauge loitered near a five-decade low at 51.2 this month. That’s down a hopeless 31% from the same month a year ago.

Surprisingly, the current conditions index actually ticked higher, and that’s what I meant above when I said it “could’ve been worse.” You’d think the government shutdown — and specifically Trump’s threat to fire thousands of furloughed workers permanently and refuse back pay — would weigh on household psychology.

“Pocketbook issues like high prices and weakening job prospects remain at the forefront of consumers’ minds,” survey director Joanne Hsu said Friday. Americans, she went on, “do not expect meaningful improvement in these factors.” The survey interviews suggested Americans have tuned out the shutdown shenanigans. (“Oh, the government doesn’t work? What else is new?”)

Inflation expectations were mostly unchanged, which in this case isn’t a good thing. The key five- to 10-year outlook printed 3.7%. To call that “too high” is an understatement of pretty epic proportions. Remember: It was a 3.3% print in the preliminary read for June of 2022 which tipped the scales in favor of 75bps rate-hike increments from the Fed. Currently, that same index is 0.4ppt higher and the Fed’s cutting rates.

The figure below illustrates the point made here at the outset. The sentiment gap between those with “large” stockholdings and those who own no stocks is widening out. Again.

Note from the chart, however, that even for the top tercile of stock-owning households, sentiment remains woefully below pre-pandemic levels even with the S&P up — and this is one of those statistics which never ceases to elicit incredulous chuckles no matter how many times I mention it — 100% since February of 2020.

The chart also gives you a sense of the extent to which households with stocks almost always feel better about things than households which don’t.

I’ll quote from the September FOMC minutes: “Several participants observed that high-income households were increasingly doing better, economically, than lower-income households.”