Consumer sentiment remains mired near an all-time low as current conditions sink further

American consumers remain in a deep funk over the economy.

The University of Michigan Consumer Sentiment Survey showed perceptions of current economic conditions plummeted in early August despite lower gasoline prices dragging down headline inflation in July.

The outlook for the year ahead, on the other hand, has improved considerably, indicating that US households are not as deeply depressed about the future. Despite the improved outlook, expectations remain well below what they were a year ago.

The consumer sentiment index rose “very slightly” to 55.1 from 51.5. The current conditions index fell to 55.5 from 58.1 a month ago. The expected conditions index rose to 54.9 from the extremely bleak reading of 47.3 in July.

“At the same time, high-income consumers, who drive a disproportionate share of spending, have seen steep declines in their current personal finances as well as conditions for buying durable goods,” said Joanne Hsu, director of the ‘investigation.

Inflation expectations were mixed. Expectations for the year ahead fell to 5%, from 5.2% in July and 5.3% in June. This figure is still significantly higher than the 4.6% expected a year ago.

The five-year inflation forecast has risen from 2.9% to 3%, possibly indicating that consumers believe inflation has become entrenched.


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