We examine how political shifts affect household economic sentiment and spending in identity-polarized settings. Using panel data on over 178,000 Indian households, we find that sentiment about personal finances—and, to a lesser extent, the national economy—predicts expenditure, even after accounting for income changes. Using close state elections, we show that Muslims become markedly more pessimistic than Hindus about national economic conditions following victories by the Hindu-nationalist party, but exhibit relatively smaller differences in personal financial sentiment and no detectable divergence in overall expenditure. We find some evidence, however, of Hindu-Muslim divergence in potentially deferrable choices—healthcare, luxury spending, and asset purchases—particularly among urban, educated, and white-collar households. A Bayesian learning framework explains the insulation of consumption from politically induced sentiment shocks through the limited and heterogeneous transmission of macro-beliefs to individual behavior in high-volatility environments.