The amounts: A survey released Friday found that consumer sentiment in the U.S. dropped to its lowest level in six months in May because people were expecting prices to go up.
The University of Michigan said that the second level of the consumer sentiment index, which was 69.1 in May, was much lower than the first level, which was 77.2 in April. The final reading was a little higher than the 67.4 reading that was predicted at first.
According to economists polled by the Wall Street Journal, the final reading for May would be 67.6.
The survey found that Americans now expect inflation to average 3.3% over the next year, up from 3.2% the month before. The first number that came up was 3.5%.
Important facts: A measure of how people feel about the current situation dropped from 79 in April to 69.6 in May. It was thought to be 68.8 at first.
Hopes for the next six months dropped from 76 in April to 68.8 now. The guess in early May was 66.5.
People think that inflation will rise at the same 3% rate over the next five years as it did in April. That’s a little less than the reading from early May, which was 3.1%.
A big picture look at the drop in mood in May: some economists think it means that people are tired of inflation and may not spend as much. The economy might slow down a lot because of that. The fact that retail sales were flat in April made this point of view stronger.
Some economists don’t agree with this pessimistic view. They say that consumers are still strong and that a period of weakness could be the “pause that refreshes.”
Officials at the Federal Reserve hope that the economy slows down so that inflation levels drop.
In the future: The unofficial start of summer was marked by a drop in sentiment, but Oren Klachkin, a financial market economist at Nationwide, said, “We don’t think it’s worth worrying about.”
In a research note, he said, “It’s clear that high prices, high interest rates, and worries about the future are weighing on consumers’ minds. However, healthy incomes and solid household balance sheets are keeping spending on a positive track.”
Stocks fell from their highs in early trading after the data was released, according to the DJIA and SPX. After a big rise in the morning, the 10-year Treasury yield BX:TMUBMUSD10Y turned around and fell to 4.471%.
