UMich May final consumer sentiment 44.8 vs 48.2 expected
- Prior was 48.2
Details:
- Conditions 45.8 vs 48.0 prelim
- Prior 47.8
- Expectations 44.1 vs 48.5 prelim
- Prior 48.5
- 1-year inflation 4.8% vs 4.6% prelim (Prior was 4.5%)
- 5-year inflation 3.9% vs 3.4% prelim (Prior was 3.4%)
UMich notes: “Consumer sentiment fell for the third straight month as supply disruptions in the Strait of Hormuz continue to boost gasoline prices. Sentiment is now just below the previous historical trough seen in June 2022. The cost of living continues to be a first-order concern, with 57% of consumers spontaneously mentioning that high prices were eroding their personal finances, up from 50% last month.
Lower-income consumers and those without college degrees posted particularly strong sentiment declines; these groups are more sensitive to increases in the cost of gas and other essentials. Independents and Republicans saw decreases in sentiment, with both groups reaching their lowest readings of the current presidential administration. Meanwhile, sentiment of Democrats was little changed from last month. Critically, consumers appear worried that inflation will increase and proliferate beyond fuel prices, even in the long run."
For backround, the University of Michigan’s Surveys of Consumers, housed at the university’s Institute for Social Research, is one of the longest-running gauges of U.S. household attitudes, with continuous monthly data stretching back to 1978 and roots in surveys conducted by economist George Katona beginning in the late 1940s. Now directed by Joanne Hsu, it produces two releases each month: a preliminary reading around the second Friday, and a final reading roughly two weeks later, typically on the last Friday of the month at 10:00 a.m. ET. The final release incorporates a fuller sample and can shift meaningfully from the preliminary number, especially when events mid-month move public opinion.
The headline Index of Consumer Sentiment (ICS) is built from a monthly survey of roughly 600 to 900 households covering views on personal finances, business conditions, and buying conditions for durable goods. It is split into two sub-indexes, the Index of Current Economic Conditions (ICC), which captures how households feel about their situation now, and the Index of Consumer Expectations (ICE), which looks six months to five years ahead. The ICE feeds into the Conference Board’s Leading Economic Index, giving the survey influence beyond its own release.
Markets also watch the survey’s inflation expectations series closely. Respondents are asked what they expect price changes to be over the next year and over the next five to ten years, and the long-run measure in particular is treated by the Federal Reserve as a key gauge of whether inflation expectations are staying anchored.
The Michigan survey is often compared with the Conference Board’s Consumer Confidence Index. Both track household attitudes, but Michigan leans more heavily on personal finances and inflation, while the Conference Board is more sensitive to labor market conditions, and the two can diverge for months at a time.
This article was written by Giuseppe Dellamotta at investinglive.com.