That’s at least how many years it’s been since consumers felt this pessimistic about the economy and their finances, one popular survey showed, revealing the degree of damage rampant inflation is doing.
Amid unrelenting increases in prices, especially for gasoline, the University of Michigan’s Index of Consumer Sentiment—which dates back to 1952—fell 14% this month to its lowest level ever, the university said Friday. The index, based on a monthly survey of at least 500 US households, never got this bad even when COVID-19 hit in 2020, or during the Great Recession, or even during the inflation-driven downturn of the early-1980s—the last time the inflation rate was higher than it is now (8.6%).
“This weakness in consumer sentiment drives home how problematic surging inflation is for consumers,” Conrad DeQuadros, a senior economic advisor at Brean Capital, said in a commentary.
Discouraged consumers are especially worrying because they are a bellwether for the overall health of the US economy. The worse consumers feel, the more likely they are to curb their spending, and that spending is the economy’s main engine of growth. The Michigan survey is a warning sign that more people could hit a breaking point and tighten their pursestrings, some economists said.
That said, The Conference Board’s measure of consumer confidence isn’t even at its lowest since the pandemic began, let only the lowest in 70 years, according to the latest reading, which was for May. And so far there hasn’t been a pullback in retail sales, some economists pointed out.
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