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Americans don’t believe in Bidennomics.
The University of Michigan’s consumer confidence index fell to 69.1 in May from 77.2 in April.
Americans are bracing for a tough summer as consumer confidence has taken a big hit from the feeling of being stuck in a sticky situation of inflation and the view that the economy is not out of the woods.
The University of Michigan’s consumer confidence index fell to 69.1 in May, down from 77.2 in April and the lowest reading in five months.
Although the final figure for May was above the provisional estimate of 67.4, it was down significantly from the previous month.
Inflation expectations are gradually rising, with Americans now expecting inflation to rise to 3.3% over the next year, up from 3.2% in April. While that’s still lower than the preliminary reading of 3.5%, the trend is worrying for both consumers and policymakers.
Some economists say the figures mean consumers may start to pull back on their spending.
The bigger picture: Some economists interpret May’s sharp drop in consumer confidence as a sign that consumers are becoming inflation-weary and may start cutting back on spending. If that happens, the economy could slow significantly, a view supported by flat retail sales in April.
Other economists disagree with the gloomy outlook, saying consumers remain resilient and some weakness could be a “refreshing pause.”
Federal Reserve officials are hoping that as the economy cools, inflationary pressures will ease.
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