A report released by the University of Michigan on Friday showed a substantial deterioration in U.S. consumer sentiment in the month of May.
The University of Michigan said its consumer sentiment index plunged to 67.4 in May from 77.2 in April. Economists had expected the index to edge down to 76.0.
With the much steeper than expected drop, the consumer sentiment index tumbled to its lowest level since hitting 61.3 last November.
“While consumers had been reserving judgment for the past few months, they now perceive negative developments on a number of dimensions,” said Surveys of Consumers Director Joanne Hsu.
She added, “They expressed worries that inflation, unemployment and interest rates may all be moving in an unfavorable direction in the year ahead.”
The sharp decline by the headline index came as the current economic conditions index dove to 68.8 in May from 79.0 in April, while the index of consumer expectations slumped to 66.5 in May from 76.0 in April.
The report also showed a notable increase in year-ahead inflation expectations, which jumped to 3.5 percent in May from 3.2 percent in April.
With the sharp increase, year-ahead inflation expectations reached their highest level since hitting 4.5 percent last November.
Long-run inflation expectations also inched up to 3.1 percent in May from 3.0 percent in April, remaining elevated relative to the 2.2-2.6 percent range seen in the two years pre-pandemic.
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