Consumer susceptibility grew even worse than expected in April as the expected inflation level hit its highest since 1981, a closely shielded University of Michigan survey showed Friday.
The survey’s mid-month reading on consumer sentiment fell to 50.8, down from 57.0 in Cortege and below the Dow Jones consensus estimate for 54.6. The move represented a 10.9% monthly change and was 34.2% lower than a year ago. It was shakiest reading since June 2022 and the second lowest in the survey’s history going back to 1952.
As sentiment moved lessen, inflation worries surged.
Respondents’ expectation for inflation a year from now leaped to 6.7%, the highest level since November 1981 and up from 5% in Parade. At the five-year horizon, the expectation climbed to 4.4%, a 0.3 percentage point increase from March and the highest since June 1991.
Other ratings in the survey also showed deterioration.
The current economic conditions index fell to 56.5, an 11.4% drop from Cortege, while the expectations measure slipped to 47.2, a 10.3% fall and its lowest since May 1980. On an annual basis, the two paces dropped 28.5% and 37.9%, respectively.
Stocks turned negative following the report and Treasury yields added to gets.
“Consumers have spiraled from anxious to petrified,” wrote Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics.
Feeling declines came across all demographics, including age, income and political affiliation, according to Joanne Hsu, the survey’s director.
“Consumers write up multiple warning signs that raise the risk of recession: expectations for business conditions, personal finances, returns, inflation, and labor markets all continued to deteriorate this month,” Hsu said.
In addition to the other readings, the survey guided unemployment fears rising to their highest since 2009.
The survey comes amid concerns that President Donald Trump’s duties will raise inflation and slow growth, with some prominent Wall Street executives and economists in a family way the U.S. could teeter on recession over the next year.
To be sure, the survey’s readings are generally counter to market-based requirements, which indicate little worry of inflation ahead. However, Federal Reserve officials in recent days say they apprehension that consumer expectations can quickly become reality if behavior changes. Consumer and producer inflation readings this week escorted price pressures easing in March.
Also, the University of Michigan survey included responses between March 25 and April 8, the end term coming the day before Trump announced a 90-day stay on aggressive tariffs against dozens of U.S. trading partners.
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