Bidenflation drives consumer sentiment to lowest level in more than a decade

U.S. households are feeling extremely rotten about economic conditions and their outlook, according to survey data released Friday.

The University of Michigan consumer confidence index plunged 9.4% in the first weeks of May, from a score of 65.2 to 59.1. This kind of fall is rare outside of a disaster or recession. It’s the lowest reading since the summer of 2011, when the country was embroiled in a debt ceiling battle and Standard & Poor’s downgraded the United States’ credit rating.

The index that tracks consumer assessments of current economic conditions fell 8.4 percent to 63.6 percent. The index that tracks expectations for future conditions slumped 9.9% to 56.3, a sharp drop in economic hope.

“These declines were broad-based – for current economic conditions as well as consumer expectations, and visible across income, age, education, geography and political affiliation – continuing the general downward trend in sentiment. over the past year,” said Joanne Hsu, the investigation’s new director.

In late April, Hsu replaced longtime consumer sentiment guru Richard Curtin as director of the University of Michigan’s Surveys of Consumers program. Curtin had conducted the survey and provided official analysis since 1976, a job he took on after earning his doctorate. from the University of Michigan in 1975. Curtin has served as director of consumer surveys for the Institute for Social Research’s Survey Research Center since 1976, after earning his Ph.D. from UM in 1975. Hsu received his Ph.D. from the University of Michigan in 2011 and came under investigation by the Federal Reserve.

“Consumers’ assessment of their current financial situation compared to a year ago is at its lowest level since 2013, with 36% of consumers attributing their negative assessment to inflation,” Hsu said.

High inflation is proven to destroy demand by depriving consumers of large purchases.

“Conditions for buying durable goods have fallen to their lowest level since the question began to appear in monthly surveys in 1978, again mainly due to high prices,” Hsu said.

The sharp drop in consumer confidence signals that consumers are exhausted by high levels of inflation, even if they don’t see inflation getting worse. The expected median inflation rate for the year ahead was 5.4%, little changed over the past three months, and long-term inflation expectations remain well anchored with a median of 3.0, close their level for nearly a year.


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