US consumer sentiment drops to 6-month low on inflation, unemployment fears

[mahatmakanejeeves]

Source: Associated Press Finance via Yahoo! Finance

Associated Press Finance
US consumer sentiment drops to 6-month low on inflation, unemployment fears

CHRISTOPHER RUGABER
Fri, May 10, 2024, 10:19 AM EDT • 2 min read

WASHINGTON (AP) — U.S. consumer sentiment fell sharply in May to the lowest level in six months as Americans cited stubbornly high inflation and interest rates, as well as fears that unemployment could rise.

The University of Michigan’s consumer sentiment index, released Friday in a preliminary version, dropped to 67.4 this month from a final reading of 77.2 in April. May's reading is still about 14% higher than a year ago. Consumers' outlook has generally been gloomy since the pandemic and particularly after inflation first spiked in 2021.

Consumer spending is a crucial driver of growth. Sour sentiment about the economy is also weighing on President Joe Biden's reelection bid. ... Still, consumer confidence surveys have not always been reliable guides to actual spending, economists note.

“Perceptions don’t always match reality and we think the fundamental backdrop remains strong enough to keep consumers spending,” said Oren Klachkin, an economist at Nationwide Financial, in a research note. “Rising incomes offer a healthy offset and will prevent consumer outlays from retrenching on a sustained basis.”

{snip}

Read more: https://finance.yahoo.com/news/us-consumer-sentiment-drops-6-141940907.html

[mahatmakanejeeves]

1. Consumer sentiment tumbles as inflation fears surge

ECONOMY
Consumer sentiment tumbles as inflation fears surge

PUBLISHED FRI, MAY 10 2024 • 10:13 AM EDT | UPDATED 3 MIN AGO

Jeff Cox
@JEFF.COX.7528
@JEFFCOXCNBCCOM

KEY POINTS
• The University of Michigan Survey of Consumers sentiment index for May posted an initial reading of 67.4 for the month, down from 77.2 in April and well off the Dow Jones consensus call for 76. The move represented a one-month decline of 12.7%.
• The one-year inflation outlook jumped to 3.5%, up 0.3 percentage point from a month ago to the highest level since November 2023.

Consumer sentiment slumped as inflation expectations rose, despite otherwise strong signals in the economy, according to a closely watched survey released Friday.

The University of Michigan Survey of Consumers sentiment index for May posted an initial reading of 67.4 for the month, down from 77.2 in April and well off the Dow Jones consensus call for 76. The move represented a one-month decline of 12.7% but a year-over-year gain of 14.2%.

Along with the downbeat sentiment measure, the outlook for inflation across the one- and five-year horizons increased.

The one-year outlook jumped to 3.5%, up 0.3 percentage point from a month ago to the highest level since November.

{snip}

[Fullduplexxx]

2. Lowest unemployment is 50 years and people are panicking over unemployment

[onenote]

3. Is 3.9 percent the lowest in 50 years? In April 2023 it was 3.4 percent

It was lower than 3.9% for 12 months in a row from February 2023 through January 2024.

And the unemployment rate was below 3.9% for 18 of the 20 months between July 2018 and February 2020.

As the article indicates, the unemployment rate has increased by 14% over where it was year ago. Consumers are hyper-aware of prices.

[progree]

4. This follows on the heels of the Conference Board's Consumer Confidence Index

which was released Tuesday April 30. It found March's number is the lowest since July 2022.
https://www.democraticunderground.com/111698012

Unfortunately I didn't see anything in the above article about inflation expectations. I didn't check the Conference Board site wherever it is.

Coming up next week: On Tuesday May 14, wholesale price inflation (PPI) will be released, followed by the consumer price index (CPI) on Wednesday, May 15.

[Xolodno]

5. A "Hangover" from the Great Resignation.

A lot of companies did their best to keep employee's as they were losing them significantly. But once things stabilized, costs due to inflation creeping up on them, etc. they started looking more closely at their labor costs, footprint and so on. Seems like every few days I read about a mass layoff at some company and in some cases, people here actually cheered it on or offered proof what an asshole a CEO was, for example, Tesla. People getting laid off is not something to gloat or make a point about how the CEO is a jerk. He probably is as nearly all of them are, however, loss of jobs is still a loss of jobs. And business entities are psychopaths by nature, if they see a drop in growth, losses, etc. they act accordingly.

I also read an article where consumer savings were trending downward, people are pulling more out of the bank or saving less due to higher costs. If it doesn't stop, even after consumers make budget adjustments, sentiment is going to go down.

Anecdotally, everyday on my LinkedIn page, I see at least one post or share of "Open to Work" as they were hit with the layoffs of .

Everyone was toting a "soft landing", I was skeptical as a few months of good economic news doesn't actually mean that. I mentioned it once here and got slammed by a few people. These things don't cycle through in a few months, often they are long in the making before hammer comes down.

[Beausoleil]

6. When a large percentage of the population

gets their "news" from right-wing media and social media, polling is skewed by misinformation (propaganda).

A big reason polling does not reflect reality.

In turn, media like the NYT determines what the "important" issues are based on flawed polls and reinforces the misinformation.