Consumer Sentiment Plunges to Record Low in June, UMich Survey

The payment: The University of Michigan consumer confidence indicator fell sharply to a record low of 50.2, compared to a May reading of 58.4. Economists polled by the Wall Street Journal had expected 59 points in June.

The level is comparable to the bottom reached in the middle of the 1980 recession, U Mich said.

Americans’ expectations for headline inflation next year rose to 5.4% in June, from 3.3% in May, while 5-year inflation expectations rose to 3.3% from 3% in the previous month.

That’s the highest level since 2008, according to Kathy Jones, a strategist at Charles Schwab.

Key data: According to the UMich report, a measure of consumer sentiment on current conditions fell to 55.4 in June from 63.3 the previous month, while a barometer of their expectations fell to 46.8 from 55.2.

Big picture: Higher gasoline and headline inflation weighs on sentiment. The proportion of consumers who cited inflation as the main reason for their negative outlook was the highest since 1981, economists at Contingent Macro said.

What they say: “Gloomy, but spending and sentiment have diverged,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “Sentiment matters to politicians, but spending matters to business.”

Market reaction: shares DJIA,

were trading significantly lower on Friday after a sharp rise in consumer prices in May. Consumer Sentiment Plunges to Record Low in June, UMich Survey

Brian Lowry

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