Consumer Sentiment Hits A Record Low
Americans are recognizing the true cost of war.
This morning’s release of the University of Michigan consumer sentiment index revealed a new all-time low. And it’s not even close.
My colleagues have been putting these numbers together since 1952, so that’s quite an achievement. (Okay, they’re not that old; it’s not the same folks.)
Some useful context: We’re 16 months into mass deportations, 14 months into a trade war, and 12 weeks into our 4-6 week war of choice.
There’s a bunch of numbers that stick out in this report:
Only 7% of Americans expect “good times” for business conditions next year.
Only 7% rate current business conditions as “better than a year ago.”
Looking ahead, only 13% expect business conditions to improve over the next year.
Nearly two-thirds (okay, it’s 65%) expect unemployment to rise over the next year.
Short-run expectations for personal finances, business conditions, and inflation have been worsening quickly since February, but long-run expectations are now starting to catch up. Consumers are no longer buying the story that our current chaos is transitory.
And don’t expect the inflation story to go anywhere anytime soon: 71% of folks expect price hikes to exceed income gains in the year ahead — reflecting recent data that shows real wages have indeed declined.
But perhaps most revealing is consumers’ beliefs about where to place the blame for these conditions. 77% of respondents (an all-time high) disapprove of the government’s approach to economic policy. (Just 11% rate the government as doing “a good job” on this measure.)
We have never seen numbers like these before.
And here’s the thing: there’s no way the economy is in any realistic sense bad enough to warrant an all-time low on so many of these sentiment measures. (Remember the OPEC oil shocks and stagflation? The twin early-’80s recessions? The financial crisis? COVID? Those sucked.)
But perhaps this last question — about competence — is the key. Perhaps folks are upset because they see our current economic troubles as entirely self-inflicted.
Krugman just released a short video on the survey as well. His worry was medium term inflation expectations were up, possibly to a level suggesting entrenched inflation….seems a bit extreme to me, this is not 1980, but I’m not an economist.
I do think a lot of this is vibes. People are angry and fearful. The GOP has spent years deriding ‘so called experts’. So people don’t believe the data, they just know they’re scared, and therefore things are horrible.
Justin, I certainly agree with the your conclusion. It’s been a difficult 15 months of watching our institutions being attacked and hollowed out and the undermining of expertise and promotion of incompetence and superficial if not outright harmful policies. It’s no wonder there is a crisis in confidence and fear of what may transpire next and the future is bringing.