The University of Michigan’s gauge of U.S. consumer confidence plunged to a “stunning loss of confidence” with a preliminary August reading of 70.2 from a final July reading of 81.2. Economists polled by the Wall Street Journal had expected an August reading of 81.3.
It is the lowest sentiment reading since December 2011, below any level in the beginning of the pandemic last year.
There have only been six larger drops in the index in the history of the survey.
According to the UMich report, a gauge of consumers’ views on current conditions tumbled 77.9 in August from 84.5 in the prior month, while a barometer of their expectations fell to 65.2 from 79 in July.
Household expectations of inflation over the next 5 years rose to 3% from 2.8% in July, economists said.
If consumers stop spending and avoid crowds, the outlook could darken quickly. Price gains seen this year are unlikely to unwind quickly, and this could result in stagflation – higher prices and a slumping economy.
MacDailyNews Take: Good times.
We now know that inflation results from all that deficit spending. — Ronald Reagan, February 5, 1981