University of Michigan's Index of Consumer Sentiment posts preliminary May level of 57.7, down from April's 63.5; decline in sentiment due to renewed concerns about the trajectory of the economy

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May 12, 2023 (press release) –

Preliminary Results for May 2023

  May Apr May M-M Y-Y
  2023 2023 2022 Change Change
Index of Consumer Sentiment 57.7 63.5 58.4 -9.1% -1.2%
Current Economic Conditions 64.5 68.2 63.3 -5.4% +1.9%
Index of Consumer Expectations 53.4 60.5 55.2 -11.7% -3.3%

 

Read our April 28th report, Confidence in Financial Institutions.
Next data release: Friday, May 26, 2023 for Final May data at 10am ET
Surveys of Consumers Director Joanne Hsu
Consumer sentiment tumbled 9% amid renewed concerns about the trajectory of the economy, erasing over half of the gains achieved after the all-time historic low from last June. While current incoming macroeconomic data show no sign of recession, consumers’ worries about the economy escalated in May alongside the proliferation of negative news about the economy, including the debt crisis standoff. Year-ahead expectations for the economy plummeted 23% from last month. Long-run expectations slid by 16% as well, indicating that consumers are worried that any economic downturn will not be brief. Throughout the current inflationary episode, consumers have shown resilience under strong labor markets, but their anticipation of a recession will lead them to pull back when signs of weakness emerge. If policymakers fail to resolve the debt ceiling crisis, these dismal views over the economy will exacerbate the dire economic consequences of default.

Year-ahead inflation expectations receded slightly to 4.5% in May after spiking to 4.6% in April. After two years of relative stability, long-run inflation expectations rose to their highest reading since 2011, lifting from 3.0% last month to 3.2% this month.

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