Consumer confidence in the United States plummets amid higher inflation expectations.
The decline at the beginning of the month was widespread across all age groups, income levels, and educational backgrounds.
Consumer confidence in the United States declined in early May to its lowest level in six months as short-term inflation expectations and concerns about the labor market increased.
The confidence index fell to 67.4 in May from the previous 77.2, according to the preliminary reading from the University of Michigan. The figure was weaker than all forecasts from an economist survey conducted by Bloomberg.
Consumers anticipate prices to rise at an annual rate of 3.5% over the next year, the highest in six months and above the 3.2% expected in April, according to Friday’s data. They expect costs to increase by 3.1% in the next five to ten years, slightly higher than the previous month.
The decline in confidence was widespread across all age groups, income levels, and education, and also reflected growing concerns about high interest rates. While the labor market has driven economic growth over the past year, the highlighted pessimistic assessment in the report adds to evidence of a slowdown.
Household income strength has been the main source of support for solid consumer spending over the past two years, so weakening labor market expectations are worrisome and, if sustained, may lead to a pullback in consumer willingness to spend.
The indicator of current conditions decreased to 68.8, while a measure of expectations fell to 66.5, both six-month lows.
Consumers’ perception of their financial situation, as well as short- and long-term economic outlooks, declined this month.
Confidence indicators also provide insights into voters’ perceptions of the economy and their finances ahead of the November presidential elections.
Confidence deteriorated this month among Democrats, Republicans, and independent voters. The latest figures underscore the challenge President Joe Biden faces in convincing Americans that his policies have aided the economy.
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