Due to inflation, consumers are feeling even worse about the US economy.

Due to inflation, consumers are feeling even worse about the US economy.


According to a carefully watched University of Michigan survey issued on Friday, US consumer morale reached a new record low in June as inflation worries grew.


The preliminary reading of 50.2 that was issued two weeks ago was slightly below the final index value of 50 in the monthly Surveys of Consumers. The final June measure reflects the lowest level ever seen since the university began gathering consumer sentiment data in November 1952, a 14.4% decline from May.



Consumer spending declined significantly across all demographic categories, including income, age, education, area, political affiliation, stock ownership, and housing status “Director of Surveys of Consumers Joanna Hsu released a statement. “Approximately 79% of customers anticipated a difficult year.

She stated that consumers’ top issue was still inflation, and that 47% of them believed that the significant price rise had reduced their ability to maintain a quality of life. According to the research, that is one percentage point less than the record high, which was attained during the Great Recession.


Consumers may feel they have little choice but to change their purchasing patterns, whether through product substitutions or completely forgoing purchases, according to Hsu. “The direction of the economy will depend critically on the pace and intensity with which these adjustments take place.”

How does inflation impact the way I live?


According to survey results, households estimate prices to rise even further this year and to stay above the Fed’s 2 percent target aim for the following five years. The average consumer anticipates inflation to be 5.3 percent this year and 3.1 percent over the following five years.


According to Hsu, there has been little change in the year-ahead expectations from the preliminary reading and those from recent months.


Nevertheless, the study indicated that consumers are slightly more upbeat about longer-term inflation as well as the labor market’s sustained improvement.


According to the study, more than half of consumers stated they anticipate an increase in income over the coming year.

The stock market crashed after the preliminary results of the Michigan survey dropped to a record-low level, and it’s possible that this contributed to the Fed’s decision last week to hike interest rates by 75 basis points, up from the previously foreshadowed 50 basis points.

US economy
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Jerome Powell, the chairman of the Federal Reserve, stated the preliminary June readings from the University of Michigan during the news conference that concluded the central bank’s June policymaking meeting.

Before the next midterm elections, political ads are “likely to prominently promote high inflation,” analysts noted in a research note released on Thursday.

They remarked that this might raise inflation expectations and keep inflation in people’s minds. According to the letter, if expectations rise, the Fed may be forced to “act firmly to even slight further rises in long-run inflation expectations.”

In light of this, the note states, “We view the impending barrage of inflation-focused political commercials as enhancing the risk that the Fed could continue to tighten aggressively even if economic activity decelerates considerably.”







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