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US DATA: Partisanship Continues To Cloud UMich Inflation Expectations Signal

US DATA
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A reminder that the UMichigan inflation expectations gauge is highly skewed by respondents' political party partisanship: 

  • Vs overall 1-year expectations of 3.3% inflation, Democrats see 4.2% (highest since June 2022, vs 3.1% prior and 1.5% in October pre-election), while Republicans see 0.1% (record low in a series that goes back to November 2020, vs 1.3% prior and 3.6% in Oct).
  • And for longer-term (5-10Y) expectations, the overall reading was 3.2%, but Democrats saw 3.9% (a new high, vs 3.4% prior and  2.7% Oct) and Republicans saw 1.7% (new low, vs 2.4% prior and 3.4% pre-election).
  • In other words, these figures should not be taken at face value as consumers' unbiased expectations for future inflation.
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A reminder that the UMichigan inflation expectations gauge is highly skewed by respondents' political party partisanship: 

  • Vs overall 1-year expectations of 3.3% inflation, Democrats see 4.2% (highest since June 2022, vs 3.1% prior and 1.5% in October pre-election), while Republicans see 0.1% (record low in a series that goes back to November 2020, vs 1.3% prior and 3.6% in Oct).
  • And for longer-term (5-10Y) expectations, the overall reading was 3.2%, but Democrats saw 3.9% (a new high, vs 3.4% prior and  2.7% Oct) and Republicans saw 1.7% (new low, vs 2.4% prior and 3.4% pre-election).
  • In other words, these figures should not be taken at face value as consumers' unbiased expectations for future inflation.
image