Consumer Sentiment from the University of Michigan came in below expectations this morning, falling to its second lowest level on record, and firing multiple torpedoes directly toward the bow of the U.S. economy.
A deeper dive into the report revealed multiple other concerning factors…
Consumers’ expectations of their financial situation in a year plummeted to the lowest level on record.
The percentage of respondents expecting higher unemployment in the next year jumped up to 66%, a level never before seen outside of a recession.
Consumer expectations for inflation in the next year rose to 7.3%, the highest since November 1981 (when inflation was at 10%).
One important caveat is that the survey was conducted before the reprieve on Chinese tariffs was announced. However, when looking at data received after the cutoff date the report noted:
Many survey measures showed some signs of improvement following the temporary reduction of China tariffs, but these initial upticks were too small to alter the overall picture – consumers continue to express somber views about the economy.
One fact is certain – and that is the UNCERTAINTY surrounding consumer sentiment and their outlook for the U.S. economy. While the stock market is seemingly resilient after the recent rebound, that stability could be in jeopardy if consumer expectations translate into actions.