Consumer sentiment took a hit in April, according to a University of Michigan survey, with expectations for inflation reaching levels not seen since the 1980s. The mid-month reading on consumer sentiment fell to 50.8, down from 57.0 in March, showing a significant monthly and yearly decline. Inflation worries increased, with respondents expecting a 6.7% increase in prices in the next year, the highest level since 1981. Additionally, expectations for inflation over the next five years rose to 4.4%, the highest since 1991.
The survey also showed declines in current economic conditions and future expectations, with drops of 11.4% and 10.3% respectively. These declines were seen across all demographics, indicating widespread concerns about the state of the economy.
Joanne Hsu, the survey director, warned that consumers are signaling potential warning signs of a recession based on their expectations for business conditions, personal finances, incomes, inflation, and labor markets.
The decline in consumer sentiment comes amidst ongoing economic uncertainty, as markets grapple with inflation concerns, labor market conditions, and the broader economic outlook. The University of Michigan survey serves as a red flag for potential challenges ahead in the economy and consumer confidence.
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