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University of Michigan consumer sentiment
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Lowest since last September
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Prior was 97.9
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Current conditions 107.8 vs 114.4 prior
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Expectations 87.3 vs 87.3 prior
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1-year inflation expectations 2.9% vs 2.9% prior
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5-10 year inflation expectations 2.5% vs 2.4% prior
Current conditions at the lowest since late 2016. Here’s the sub-index:
That’s an odds drop given the strength in the stock market but it shows that perhaps the trade battle has consumers worried. The worries about durables are probably due to higher prices of
Comments from chief economists Richard Curtin:
“Consumer sentiment slipped to its lowest level since last September,
with the decline concentrated among households in the bottom third of
the income distribution. The dominating weakness reflected much less
favorable assessments of buying conditions, mainly due to less favorable
perceptions of market prices. Buying conditions for large household
durables sank to the lowest level in nearly four years. When asked to
explain their views, consumers voiced the least favorable views on
pricing for household durables in nearly ten years, since October 2008.
Vehicle buying conditions were viewed less favorably in August than
anytime in the last four years, with vehicle prices being judged less
favorably than anytime since the close of 1984. Home buying conditions
were viewed less favorably in early August than anytime in the past ten
years, with home prices judged less favorably than anytime since 2006. These are extraordinary shifts in price perceptions
given that consumers anticipate an inflation rate in the year ahead of
2.9% in early August, unchanged from last month. The data suggest that
consumers have become much more sensitive to even relatively low
inflation rates than in past decades. As is usual at this stage in the
business cycle, some price resistance has been neutralized by rising
wages, although the falloff in favorable price perceptions has been much
larger than ever before recorded. Overall, the data indicate that
consumers have little tolerance for overshooting inflation targets, and
to the benefit of the Fed, interest rates now play a more decisive role
in purchase decisions.”
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