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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.

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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.

Also, the five-year outlook rose to 3.1%, an increase of just 0.1 percentage point but reversing a trend of lower readings in the past few months, also to the highest since November.

“While consumers had been reserving judgment for the past few months, they now perceive negative developments on a number of dimensions,” said Joanne Hsu, the survey’s director. “They expressed worries that inflation, unemployment and interest rates may all be moving in an unfavorable direction in the year ahead.”

Other indexes in the survey also posted substantial declines: The current conditions index fell to 68.8, down more than 10 points, while the expectations measure fell to 66.5, down 9.5 points. Both pointed to monthly drops of more than 12%, though they were higher from a year ago.

The report comes despite the stock market riding a strong rally and gasoline prices nudging lower, though still at elevated levels. Most labor market signals remain solid, though jobless claims last week hit their highest level since late August.

“All things considered, however, the magnitude of the slump in confidence is pretty big and it isn’t satisfactorily explained by” geopolitical factors or the mid-April stock market sell-off, wrote Paul Ashworth, chief North America economist at Capital Economics. “That leaves us wondering if we’re missing something more worrying going on with the consumer.”

The inflation readings represent the biggest pitfall for policymakers as the Federal Reserve contemplates the near-term path of monetary policy.

“Uncertainty about the inflation path could suppress consumer spending in the coming months. The Fed is walking a tightrope as they balance both mandates of price stability and growth,” said Jeffrey Roach, chief economist at LPL Financial. “Although it’s not our base case, we do see rising risks of stagflation, a concern the markets will have to deal with, in addition to the impacts from the presidential election.”

At their meeting last week, Fed officials indicated they need “greater confidence” that inflation is moving “sustainably” back to their 2% goal before lowering interest rates. Policymakers consider expectations a key to taming inflation, and the outlook now from the Michigan survey has shown consecutive months of increases after falling considerably between November and March of this year.

Market pricing is pointing to a strong expectation that the Fed will begin reducing its key borrowing rate in September after holding it at its highest level in more than 20 years since July 2023. However, the outlook has been in flux even with Fed Chair Jerome Powell indicating in his post-meeting news conference that it is unlikely the central bank’s next move would be a hike.

The next important data point for inflation comes Wednesday when the Labor Department releases its consumer price index report for April. Most Wall Street economists expect the report to show a slight moderation in price pressures, though the widely followed CPI index has been running well ahead of the Fed’s target, at 3.5% annually in March.

Rick Santelli is da man!

I swear, these economists have to be actually retarded or that out of touch to not understand “consumer sentiment”.  

We are beside ourselves with glee that inflation maybe might be sorta kinda cooling down a bit.  Guess what, we’ve had several years where it wasn’t so shit got expensive and wages didn’t keep up on top of being devalued.  I might be better off wiping my ass with dollar bills instead of using toilet paper.  Buying groceries, houses, cars, whatever is a nightmare.

Unless there’s some deflationary event to return things to “normal” we’re all going to be unsettled.

For TLDR folks:
- Inflation is 3.5%, almost double the FED's target.  Mortgage rates may rise even higher.
- Consumer Sentiment is almost 10% lower than last month.  Consumers are losing confidence.

I know Ive seen restaurants less busy lately

STAGFLATION BABY

They said it would never happen. Here is it.

elections have consequences.

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Add in the building layoffs and things don’t look great.

Soon

I live in the Marcellus shale belt and the water trucks are seriously absent in the past 2 months, but especially this past month. I know they have been laying off guys left and right lately, and work weeks have been reduced from from anything you want for OT to just barely 40 hours.

Add in the fact that restaurants are much less busy now than they have been, and yeah things are bad and getting worse

Ah I see we're not talking about the permanently unemployed (those out of the workforce 6+ months), and stagnant wages.

Yeah yeah, economy is great at a real unemployment rate in the double digits, record credit card debt, and declining top line revenue month over month.

Someone on one of the business channels said Europeans were doing the exact opposite of US consumers, they are actually saving their money, while US consumers are blowing through theirs.

People are eating out less because their budgets are blown by overall inflation, and restaurants are much more expensive now. The value proposition of fast food basically doesn’t exist anymore, and you’re not getting out of any decent sit-down place for under $100 for a family these days.

Joe Biden: All part of the plan.

Yes he is.
He predicted the 2008 crash about a year before it happened on msnbc.

I believe that but think that will change. A lot of the 2019 model of how people worked and played is being left behind permanently. Even if Trump wins. Demographic changes alone will ensure this. As Gen Z reacts to the shit sandwich they’ve been handed they’re going to rebel against the consumer model they’re being told to adopt. DoorDash is a boom/bust business that’s about six months behind experiencing the problems fast food is.

Business owners will need to adapt. I feel terrible for restaurant owners, especially the small businesses. They were fucked during the fake pandemic and they’re not connected enough to benefit from government favors for the big players.

LGB!

Good. Everyone should eliminate debt and build savings. It would have no impact on the economy and we'd be better off for it.

It’s the economy stupid.  Hopefully it will translate to a change in Nov.

Office occupancy rates are still shit. Even efforts to remodel them into housing units is failing.

New home construction is a mixed bag. Very regional specific trends. But material costs are still shit.

I am shocked they haven't started "Fears of a Trump election win are negatively impacting the economy ".

In reality,  a few companies and government spending are what is driving what little growth exists.

The US economy is too big to be supported by government spending. Stop thinking that debt is necessary for economic growth.

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DD is the biggest rip off on the face of the planet, I cannot believe people use that. I could understand being stuck at home injured, stuck at work, or home with the kids... But, the frivolity with which people I know use it is ridiculous.

I felt terrible for them as well.

Since COVID the prices at the Mexican and Vietnamese restaurants have doubled, ridiculous. The nice places have increased, but not by the same percentage, but they are now charging credit card fees. In fact, most places are charging credit card fees now.

Why go out to eat?  All restaurants are double what they used to be, and the portions are notably less.

Then groceries are up 30%, and sizes are smaller.  Then housing, whether own or rent, is a disaster.  And vehicles, a used is no bargain any longer, and I really wish .gov would make some more things mandatory to increase cost even more .

But I forgot, gas is a bargain at less than 2x what it was a couple years ago.

stop eating at restaurants.

problem solved, problem staying solved.

I still expected the Carter years, and likely a lot is hidden from shrinkflation

Gas prices doubled, like Carter, an obvious
Combined increased food costs and reduced sizing

good thing we don't know the real numbers of anything...

they are L Y I N G

1/21/2025

Honestly saving right now is probably a bad idea. But physical assets and property.

How am I supposed to keep my wife happy if I don't eat out.

you care about making your wife happy?



shouldn't the wife unit be barefoot and pregnant in the kitchen whilst making you a delicious hamm sammy () after a blowie as you watch sportscenter on da couch in your filthy stained sweatpants and text your side chick?

goddamn, bubs.

I’m a cash buyer, there are deals to be had!

Fears of inflation?!
Have these folks not been to the grocery store.  It's already here baby.

Janet Yellen has been a disaster at both the fed and as sec. of treasury.

This mother fucker best crash in the next, 4 months max.

Gas is almost $4 a gallon, people are now driving back and forth to work as WFH has dropped dramatically, that expense has to be covered by pulling expenditures from elsewhere in the household budget.

When I was working from home, the savings from the lowered expenses was pretty noticeable, especially when you also figure in long time true costs also like maintenance, tire wear, and so on. Figure a couple K a year easily just for a single driver household.

Still way too early. Patience will pay off.

We kinda sorta started looking for a little used ultralight TT. A few are starting to trend down to realistic value but are still rare. You gotta feel sorry for the clowns that bought RV's at retail during top of the market during covid with their stimulus checks. Their advertising at note pay off numbers. Good luck, that's close to double their real value.

Having lived as a teenager and young adult in the 70's and early 80's,
the only thing that surprises me is how few saw this coming when the initial Covid Stimmy storm started.

It was as plain as the nose on my face to me, FOUR years ago that this was coming. I started preparing for it $700/oz ago.

The debt is unsustainable. Congress continues to spend like drunken sailors on shore leave while the Fed TRIES to get inflation under control.
The mad lads in Washington think it's a grand idea to pay off student loans when SS and Medicare are known to be dying.

We've kicked that can about as far as it will go now. So there are 3 choices left. Default, which isn't happening. Inflate the money supply
to reduce the impact of the debt and its service, or heavily reduce spending, stop borrowing and start reducing the debt.

The only one that the people will tolerate at all, is the 2nd one. Even worse inflation is coming. DC doesn't have the stomach to reduce their frivolous ways.

Another thing I saw plainly was the demise of the dollar hegemony. The minute they froze Russia's reserves, the response was obvious.
Now we've doubled down on the stupid, and plan to give Russia's reserves to Ukraine. Nobody is going to add to their dollar reserves now.
Many countries that saw fit to keep their gold reserves stored here, are bringing them home. Selling UST's to buy gold.
Japan is selling UST's and buying Yen trying to keep their currency solvent.

The only thing keeping the dollar up, is being the cleanest shirt in the dirty laundry. If it falls, as it should, that just makes our consumer economy that is heavily dependent on imported goods, that much worse.

We are well and truly fucked.

Shit I knew I ducked something up. That my side chick while I text my wife.

Surprised all those californians aren't jumping up and down with their raise to $20 an hour. Why housing and autos sales will probably be off the charts now that they're all rich...........

I'm seeing less sales for Razors, SxS's, boats, campers and other big ticket toys.
But I still see a lot of people doing the Doordash and eating out a lot routine. Same with concert tickets. But the big stuff? Slowing down IMO
The sub $200 nights out on the town or events , micro charges and pay services for luxuries and TV seems to be still humming along.

Shit is about to start getting unsteady on this ladder of Bidenomics.

You'll know the crash is about to happen when the WH denies anything to do with what people have coined, "Bidenomics", using the term incorrectly.

Definitely taking some stock profits right now and cutting my exposure just a bit, along with moving some to high dividend stocks.  I'm a looooong way from being rich, so keeping what I have is a top priority. I just can't see markets going much higher in the short term, but that's just a gut feeling on my part.

Only $4.00 a gallon would be nice.