Fear of rising American prices is weighing on consumer sentiment and raising concerns about how quickly the US economy will be able to recover from the epidemic.
The Consumer Awareness Survey of the University of Michigan dropped from 6.3 in April to 6.8 in May due to weak consumer perceptions of the current and future situation. A survey by economists at Reuters found that this would rise to 90.4 compared to the expectations of closely monitored gauges.
The decline in sentiment comes as a surprise – the rapid vaccine rollout in the United States, the reopening of the economy and the distribution of stimulus checks were all expected to boost consumer confidence.
“Consumers are starting to feel the pinnacle of inflation and they are concerned that we have had the low inflation we have suffered for decades,” said Thomas Simmons, a market economist at Jefferies.
Surveyors identified the condition of buying homes, cars and long-lasting household items as the most negative “since the last inflationary era of the 1980s,” said Richard Curtin, chief economist at Consumer Survey.
Data released earlier this week showed this Consumer prices were improved At 4.2 percent in the 12 months to April, the largest increase since 200 in the 12 months to April That has further fueled concerns that the U.S. economy is intensifying as activity culminates.
ING economist James Knightley says the recent uprising Colon colonial pipeline – A critical artery supplying liquid fuel from oil refineries in the U.S. East Coast states, which was closed for five days in a cyber attack – and subsequently Gasoline prices have risen and panic-buying There may also be “acting a part”.
The Federal Reserve has repeatedly warned that any increase in inflation would be temporary, although rising prices have become a challenge for policymakers as they continue to push the economy ashore with greater fiscal and monetary stimulus.
Investors hear the rise of high consumer price expectations from a string of Fed officials to speak to next week. Policymakers’ messages will continue to be important in the coming months.
Consumer stress eased after a report from the Commerce Department that retail sales were unexpectedly suspended after strong stimulus in March, encouraged by easing stimulus checks and lockdown restrictions.
Sales and online sales of clothing, sporting goods, hobbies and bookstores all declined last month. Purchases of cars and car parts and electronics increased, and spending in bars and restaurants rose 3 percent, indicating a shift in spending from goods to services.
Yet some economists predict the strongest growth in consumer spending since 1944 this year.
“Significantly, consumer spending will still rise despite higher prices due to the balance of paint-up demand and record-keeping,” Courtin said.
“The combination of uninterrupted demand in the face of rising prices creates the potential for inflationary psychology, increasing the already outstanding progress logic and increasing the cost of living on wages,” he added.