After a big 12% drop this month, consumer sentiment landed at 58.6. This worrisome development was uncovered by a recent survey from the University of Michigan. The survey’s leading “expectations” index, which just crashed by 18%, is now down more than 30% since the November 2024 elections. This overall decline signals worsening sentiment among Americans as anxiety increases over inflation and unemployment.
The survey underscores that inflation expectations for the year ahead have risen to 5%, an increase from 4.3% last month. That’s the highest reading since November of 2022. Long-term inflation expectations over the next 5 to 10 years jumped to 4.1%. Seasonally adjusted, this is the highest level since February of 1993.
It’s bad enough that President Donald Trump seems primed to announce sweeping additional tariffs. This step would have a major positive impact on consumer confidence. These new enforcement responsibilities – nicknamed “the big one” by insiders – focus on foreign nations. The organization’s aim is to fit them harmoniously with the responsibilities that the United States must undertake. The possible economic impact of implementing such tariffs only compounds the uncertainty consumers are already experiencing.
“Consumers continue to worry about the potential for pain amid ongoing economic policy developments.” – Joanne Hsu
Two-thirds of consumers anticipate an increase in unemployment in the year ahead. That is the highest share with such expectations since 2009. This feeling expresses additional panic with concerns of the economy overall as inflationary pressures begin to rear their ugly head.
“Notably, two-thirds of consumers expect unemployment to rise in the year ahead, the highest reading since 2009.” – Joanne Hsu