Americans sour on economy as inflation expectations hit highest level since 1991

Key Points

  • Consumer sentiment in the US dropped to its lowest level since November 2022, influenced by concerns over Trump's tariff policies and rising prices.
  • Inflation expectations for the next year jumped to 4.9%, with long-term expectations reaching the highest since 1991.

Summary

The University of Michigan's latest consumer sentiment survey indicates a significant drop in consumer confidence, reaching its lowest point since November 2022. This decline is largely attributed to the uncertainty surrounding President Trump's tariff policies and the resultant increase in prices. The survey highlighted a sharp rise in one-year inflation expectations to 4.9% from 4.3% the previous month, while long-term expectations over the next five to ten years hit 3.9%, the highest since 1991. Despite some economic indicators showing a slight decrease in inflation rates, consumer sentiment has been negatively impacted by the frequent policy changes and the looming threat of retaliatory tariffs from countries like the EU and Canada. This uncertainty has not only affected consumer expectations but also contributed to a volatile stock market, with the S&P 500 entering correction territory. The ongoing policy flip-flops and the resultant economic noise are seen as major contributors to the current economic pessimism among Americans.

yahoo
March 14, 2025
Stocks
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