Consumer Sentiment for May was released this morning and disappointed forecasts, falling nearly 13% from the previous month. The 9.8 index-point drop is the largest in almost three years and reiterates the concerns surrounding remaining consumer strength.
Today’s release is its lowest reading in six months, giving back all of the gains seen this year. Consumers cited worries about unemployment, reaccelerating inflation, and the potential for rising interest rates to remain a significant headwind.
The Current Conditions and Future Expectations Indexes also fell and were below forecasts, raising alarm bells that future consumer spending could be affected by continued negative sentiment. Year-ahead inflation expectations rose to 3.5%, which is a six month high and remains well above the range seen pre-pandemic.
Today’s report adds to an ever-growing list of rapidly changing evidence that economic conditions may be weaker than meets the eye. Furthermore, growing concerns among consumers about their own economic situation could have major impacts on the broader economy.
