By Geoffrey Smith
Investing.com — Consumer sentiment in the U.S. is at its lowest ebb in 11 years after another sharp drop, according to the University of Michigan.
The university’s monthly survey showed the main index falling more than expected to 59.1 from 65.2 in the month through mid-April. The sub-indices assessing and both fell.
The one bright spot from the survey was that consumers’ over the next five years remained steady at 3.0%, suggesting that the Federal Reserve is no longer falling behind the curve in the public mind when it comes to bringing inflation down. Fed Chair Jerome Powell had indicated in an NPR radio interview on Thursday that he still doesn’t think it’s necessary to raise interest rates by more than half a percent att a time.
Data released earlier this week were interpreted as a tentative sign that year-on-year may have peaked at 8.5% in March, declining to 8.3% in April. For the next 12 months, consumers see inflation at around 5.4%, the university said.
The survey added to evidence suggesting that inflation, coupled with the depletion of pandemic-era savings, is weighing increasingly on sentiment, especially among lower-income segments. It also provided further evidence that consumers are reversing some of the spending patterns seen during the pandemic. Buying conditions for durables reached their lowest reading since the question began appearing on the monthly surveys in 1978, primarily due to high prices, the university said.
Declines in sentiment were “broad-based and visible across income, age, education, geography and political affiliation,” the university said.