Egypt Daily News – A survey conducted by the University of Michigan on Friday showed that U.S. consumer confidence deteriorated worse than expected this month, with the expected inflation rate reaching its highest level since 1981.
The consumer confidence index for mid-April dropped to 50.8 points, down from 57 points in March, and lower than the Dow Jones average forecast of 54.6 points. This represents a 10.9% monthly decline and a 34.2% decrease compared to last year. This reading is the lowest since June 2022 and the second-lowest in the survey’s history, which dates back to 1952, according to CNBC Arabia.
Decline in Consumer Confidence Due to Inflation Expectations
With the decline in consumer confidence, inflation concerns have risen, as participants’ expectations for inflation one year from now surged to 6.7%, the highest level since November 1981. This is an increase from the 5% forecast in March.
Over the next five years, inflation expectations rose to 4.4%, an increase of 0.3 percentage points from March, the highest since June 1991.
Deterioration in Economic Conditions Indicators
Other indicators in the survey also showed deterioration. The current economic conditions index in the U.S. dropped to 56.5, down 11.4% from March. The expectations index fell to 47.2, a 10.3% decrease, its lowest level since May 1980. Year-over-year, the two indices declined by 28.5% and 37.9%, respectively.
U.S. stocks dropped following the report, and Treasury bond yields increased, reflecting the market’s reaction. According to survey director Joanne Hsu, sentiment declines affected all demographic groups, including age, income, and political affiliation. Hsu stated, “Consumers reported several warning signs that increase the risk of a recession: expectations for business conditions, personal financial situation, income, inflation, and labor markets continued to deteriorate this month. Along with other readings, the survey showed a rise in unemployment concerns to their highest level since 2009.”
