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Consumers are feeling worse about the economy again

<i>Bing Guan/Bloomberg/Getty Images</i><br/>Americans are feeling worse about the state of the economy again and it's all because of rampant inflation.
Bloomberg via Getty Images
Bing Guan/Bloomberg/Getty Images
Americans are feeling worse about the state of the economy again and it's all because of rampant inflation.

By Anneken Tappe, CNN Business

Americans are feeling worse about the state of the economy again and it’s all because of rampant inflation.

Even as the pace of consumer price hikes moderated some in April, inflation remains near a 40-year high and is putting many US household budgets in a vice.

Consumer sentiment dropped by 9.4% between April and May, according to preliminary survey data released by the University of Michigan on Friday. That reversed the short-lived gain seen in April when sentiment was helped by a moderation in gas prices, which had been rising in response to the war in Ukraine.

At 59.1, the consumer sentiment index fell to its lowest level since 2011.

Other data points tracked by the same survey, including current economic conditions and consumer expectations, also fell.

“Consumers’ assessment of their current financial situation relative to a year ago is at its lowest reading since 2013, with 36% of consumers attributing their negative assessment to inflation,” said Joanne Hsu, director of the Surveys of Consumers.

Worse still, Americans consider conditions for buying durable goods, such as furniture or appliances, to be the least favorable since the question was first included on the survey in 1978.

Even so, inflation expectations for the year ahead held at 5.4%, more or less steady with where they have been over the past three months. Long-term inflation expectations also stayed put at 3%, where they have broadly been over the past 10 months.

It’s a tricky time for Americans and making sense of the confluence of economic dynamics of the moment is challenging.

“It is tough to find a silver lining for consumers so far in 2022. Inflation is as bad as it has been in decades,” wrote Tim Quinlan and Sara Cotsakis, economists at Wells Fargo, in a research note. “Rising mortgage rates make housing even less affordable. Gas prices are at an all-time high. Supply chain problems are still making everything from infant formula to household appliances hard to find.”

Prices have been uncomfortably high for long enough to influence consumers’ buying decisions for bigger ticket items. Supply chain issues that are still not resolved have just exacerbated that. The war in Ukraine is weighing on food and gas prices.

Meanwhile, wages are rising, helping to cushion the blow for some households, and savings are still robust, too.

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6 Comments

  1. how could ANYONE worry about the economy. We have the most popular democrat president in history. Joe Biden has done more, in under two years, to bring forth the goals of the democrat party. Prove me wrong. Has any democrat president done more for the democrat party? Obama said energy costs must “necessarily skyrocket” but never made it happen. Joe Biden made it happen. Look around. High gas. Baby food shortages. Supply chain failures. Supreme court judges can be threatened by democrat activists in violation of federal law without consequence. Laws can be broken by democrat thugs while the entire federal government can now be used to destroy political enemies of the democrat party. Joe Biden created a Ministry of Truth. Joe Biden is the most successful democrat president in this nation’s history. That is 100% fact.

    1. I’ve said it before and I’ll say it again: Biden is a poor President. But unless you can point me to an example of Biden shutting down a non-violent right-wing protest, he’s still more American than Trump. I’m just praying the next Republican nominee isn’t worse than both of them.

      The real long game here by Democrats would have been to have Trump continue as President to cover the impending downturn (which was going to happen since there were too many things propping up the economy making it susceptible to external stressors) then the people would elect a Democrat to “save” everything, just like happened with Bush and Obama. (The President doesn’t actually unilaterally wield this power, but most people think they do, so it’s good enough for getting people to vote for you.) But now they’re going to get it the other way around and the next Republican candidate will “save” them. All because political parties are in it for short-term gain, not for long-term America.

      Republicans need about 11 more states before they can start repealing parts of the Bill of Rights and adding amendments to restrict the rights of others. Mind you, the people who actually come to power don’t care about this one way or the other; they just do whatever it takes to stay in power. And when you have a highly polarized and potentially ethnonationalist majority of voters, taking away rights from alienated and vilified minority groups is still the best way to do that. About 9 states are swing states. As this left/right divide gets split wider by the Bidens and Trumps that we keep electing, someone is bound to eventually get there. And when that happens, we’ll start to see things going into the Constitution that restrict rights, not grant them. That will be a sad day for this country, and, arguably, the effective end of it.

      You know who was best? Bernie 2016. There was a guy who could reach both sides of the aisle in a way that Trump or Biden can’t even touch. (And they don’t want to, because they gain personal power by cutting the country in half, which, really, should be enough reason for any American to not vote for them.) Was Bernie flawless? Not at all. But he was the best we’ve seen in a while. Bernie 2020 did not have that same skill; he switched to modern Idiocracy politicking to try to get votes, just like everyone else. It’s more generally effective, sadly, but it did not become him.

      These days, I am convinced you cannot be both partisan and American. Maybe back in the 70s or 80s when people worked together, then you could. But now it’s partisans on the left and right, and America in the crossfire.

      1. Your TDS remains off the chart- your claims of DJ Trump shutting down anything are total BS- the US President has no single/unilateral authority to do so… turn off CNN- they are not your friend.

  2. Biden continues to rack up the records ! “At 59.1, the consumer sentiment index fell to its lowest level since 2011.” !!! Worst President ever- and you can take your pick about what ! There is not a single socio economic group that he’s not affected- from babies to retired senior citizens living on a fixed income- Biden has mucked it all up. Now suffer the consequences of those who ignorantly voted for this stooge.

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