consumer confidence deteriorates significantly in May (University of Michigan)

American consumer confidence deteriorated sharply in May, in all categories of the population, and the index measuring it fell to its lowest level since August 2011. The index thus lost 9.4% compared to April, and fell to 59.1 points, according to the preliminary estimate of the University of Michigan survey released on Friday. This deterioration surprised analysts, who expected a much weaker decline, and expected an index of 63.5 points.

The decline concerns both the perception of current economic conditions and the outlook for the coming months, and is widespread, regardless of “income, age, education, geography, and political affiliation“, details Joanne Hsu, economist in charge of this very closely followed survey of the markets.

The index measuring the perception of current conditions lost 8.4% compared to April, and fell to 63.6 points, while that measuring the prospects seen by consumers fell by 9.9%, to 56.3 points. Compared to May 2021, the fall is, respectively, 28.9% and 28.6%. “Consumers’ assessment of their current financial situation compared to a year ago is at its lowest level since 2013“, emphasizes the economist, and more than a third of consumers attribute these difficulties to inflation.

The conditions for purchasing durable goods – those used for more than three years such as household appliances, clothing, or even cars – have evenreached their lowest level since the question began to appear in monthly surveys in 1978, again mainly due to high prices“says Ms. Hsu.

Inflation, which had reached its highest level in 40 years in March, slowed down a little in April in the United States but remained very high, at 8.3% over one year, according to the CPI index. President Joe Biden has framed this problem as “national priority”, but the chairman of the central bank (Fed), Jerome Powell, warned that slowing it down would not be painless.

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