Declining Consumer Sentiment Warning Sign For Biden

The University of Michigan consumer sentiment index ticked down to 69.1 this month - from 77.2 in April - due to concerns over lingering inflation. The decline is a major warning sign for President Joe Biden that he can't count on a presidential campaign bolstered by receding concerns over inflation.

• Survey director, Joanne Hsu, said: Consumer sentiment fell back about 10% this May following three consecutive months of very little change. This 8.1 index-point decrease is statistically significant and brings sentiment to its lowest reading in about five months.”
• Hsu added: “The year-ahead outlook for business conditions saw a particularly notable decline, while views about personal finances were little changed. Consumers expressed particular concern over labor markets; they expect unemployment rates to rise and income growth to slow... Still, sentiment remains almost 20% above a year ago and about 40% above the all-time historic low in June 2022, reflecting how much consumer views have improved as inflation eased.”
• The Wall Street Journal notes: “Expectations for inflation edged up from a month earlier, staying above the average seen before the Covid-19 pandemic. The sentiment reading was a little higher than economists' expectations. But consumers set out a more pessimistic view of current conditions and the coming months.”

Figure 1: Index of Consumer Sentiment, Final Results for May 2024