**Americans’ views of the economy continued to sour in May, as the University of Michigan’s consumer sentiment index dropped to a preliminary reading of 50.8, down 3% from the final reading of 52.2 in April. It’s the second-lowest reading for the index in data going back to the 1970s, behind only June 2022.
Inflation expectations worsened, too. Consumers now expect to see inflation hit 7.3% in the next year, up from the 6.5% rate projected last month. Long-term inflation expectations rose from 4.4% to 4.6%.**
I find this strange because the economy seems to be doing good right now but they are expecting inflation to get really bad due to the tariffs. We will see.
Hang on there Cochise. How could 22 be worse than 2020? How could it be worse than 2009? How could it be worse than 82, in their data set going back to the 70s?
We are talking sentiment not GDP. Sometimes sentiment doesn’t follow what actually happens. Also in that sentiment survey it was back in March. It could be going up now.
The information isn’t from the media but the interpretation of the data was from the media. Still your GDP numbers are not a true representation either.
And what influences the thinking of the mob that the data supposedly measures?
Many on this board are old enough to remember all those recessions. Many of us were working during those recessions. Living in the big three’s front yard, I remember the headlines when auto plants lay off thousands at a stroke. I noticed the lack of traffic on the streets when I drove to work in 82. The company I worked at in 2009 has a pay cut, and rolling layoffs.
this is just my opinion, but the “bad” sentiment is coming from a complete lack of respect and trust of the guy in the Oval Office. Does anybody truly think we’ve seen the last of the idiotic ready-shoot-aim policy decisions from him and his gang ? I sure don’t. Now if Congress grew a spine, that would help my sentiment. But the majority of them are in the same gang. And the “tariff story” is not over, it is still playing out. Along with reduced government services that many people in the population use ( odd how that is just dawning on them now, lol ).
So higher prices coming from tariffs ( how high, who knows ??), uncertainty due to the schizophrenic actions of current regime in regards to immigration, contractual law, heeding and obeying judicial decree’s, the actual verbal garbage spewed out on a daily basis by TIG, … I can go on.
Why would rational consumer sentiment not be low ???
All of the posters on this board are probably pretty well off, but that “might not” be the case for a lot of the population.
Media hysteria is part of it. Media bias produces distorted memes.
Another part is “echo chambers” picking up the mantra and amplifying it along their echo path/s. Memes that incite negative emotions and sentiment capture eyeballs.
Another part is the willful division between people, and no one looking for common ground.
Instant communication via social media makes echo chambering and amplification easy.
And, troll messaging across all media, by entities who want to intentionally cause social discord and anxiety.
We aren’t hearing much, recently, about trolls n troll farms… Now, they’re called “bots”?
Fake news and memes by foreign troll farms n workers (and influencers) to incite emotions and negative sentiment.
I agree Ralph but I think a lot of it is the unknown also. When someone puts forth a sound policy and sticks to it then people’s imagination can’t take over. But for me I will just follow the market, but that even seems to be manipulated by Trump and his Tariff deals and now Moody down grading the United States on a Friday night.
But, point being that your memories of bad times in the past are not really relevant to what people expect today. In particular, it might have something to do with confidence in leadership.
lessee…I watched a “not a crook” lead us into one recession. A second rate actor preside over the next recession. A reportedly coke addled sonny boy lead us into another. “Confidence”?
If you look across several measures, I think you’ll find some for the current situation (latest data) that are not fine.
To start, GDP for Q1 was negative.
How about April retail sales?
+0.1% MoM
CPI was +0.2% MoM
so -0.1% retail sales in April after back envelope CPI adjustment
Here’s Chicago Fed’s calc on related metric:
That points to a negative contribution to GDP growth.
Consumer spending is a large part of GDP.
Housing permits, starts, completions in April all shrunk versus 2024
ISM survey says manufacturing shrunk in April.
Industrial production was flat in April, zero growth.
Just one month of data. But it’s what’s available.
We know there is a slowdown in ships arriving from China, that will put a slowdown in all supporting logistics and all other downstream economic activities related to that cargo.
Walmart, the largest US retailer, is pointing to higher prices.
When I look at the data, I see near zero growth: maybe negative, zero or weakly positive.
Keep in mind that consumer sentiment, especially on the downside, is strongly contraindicated with market performance.
In other words, when sentiment spikes down, it is usually a very good time to invest. S&P 500 forward return average is something like 30% when sentiment bottoms out. I thought it would bottom in March.
I was referring to the UM sentiment survey (done between April 22 and May 13) which found that for current economic conditions the average was 57.6, quite a bit higher than future expectations.
By the way, the UoM survey is in a transition from a phone method to one based on the internet. They note that “the presence of an interviewer, who is trained to project a friendly and pleasant demeanor, potentially generates more favorable survey responses and fewer “don’t know” responses than what a respondent would select in the absence of an interviewer.”
That can be seen in their graph where the red dotted line (web results) are consistently lower.
