Keeping you up to date on the latest data releases.
- Consumer Sentiment
The University of Michigan’s Index of Consumer Sentiment plummeted in August, falling 8.8 points (or 13.8 percent) to a level of 54.9, and is now slightly lower than its level of 55.3 during the depths of the recent financial crisis (November 2008). The last time sentiment was this low was during the 1980 recession. Consumer pessimism has grown over the past four months, as the sentiment index has fallen nearly 20 points since May. While consumers’ judgment over the current conditions has weakened considerably as of late, the majority of the the downward plunge in the overall sentiment index has come from the consumer expectations component—which fell 10.3 points in August to a level of 45.7 (within a few tenths from its all-time low). As for a possible driver of such pessimism, the release noted: “More importantly, consumers have shifted from being optimistic about the potential impact of monetary and fiscal policies to a sense of despair and pessimism about the role of the government. Never before in the history of the surveys have so many consumers spontaneously mentioned negative aspects of the government’s role, and never before have consumers rated economic policies so unfavorably.” While consumers’ sentiment weakened in August, inflation expectations remained unchanged. Shorter-term inflation expectations (1 year ahead) were flat at 3.4 percent and longer-term inflation expectations (5 years ahead) remained at 2.9 percent.