Following UMich’s sentiment slump in July, analysts expect a further (modest) slide in Americans’ confidence in preliminary August data this morning. They were wrong, very wrong!
Sentiment crashed in early August data according to UMich Sentiment survey with the headline plunging from 81.2 to 70.0 – that is weaker than the April 2020 COVID crisis lows…
Source: Bloomberg
Worse still, ‘expectations’ collapsed too.
“just 32% of consumers thought that the economy would improve, well below last month’s 45% and the 50% in June”
Over the past half century, the Sentiment Index has only recorded larger losses in six other surveys, all connected to sudden negative changes in the economy: the only larger declines in the Sentiment Index occurred during the economy’s shutdown in April 2020 (-19.4%) and at the depths of the Great Recession in October 2008 (-18.1%).
Confidence collapsed for both Republicans and Democrats…
Source: Bloomberg
Even more ominously, while short-term inflation expectations eased very modestly, longer-term expectations rebounded back to multiyear highs (inflation was expected to average 3.0% over the next five years, up from 2.8% in the past two months, regaining the same level as in May.)…
Source: Bloomberg
And the inflation expectations have sent “bad” buying conditions expectations to record highs across all segments…
Source: Bloomberg
Presumably this is due to the Biden administration’s scaremongering response to the Delta variant (which obviously is due to white supremacist anti-vaxxers not being vaccinated)… except it’s not…
“Consumers have correctly reasoned that the economy’s performance will be diminished over the next several months, but the extraordinary surge in negative economic assessments also reflects an emotional response, mainly from dashed hopes that the pandemic would soon end,” Richard Curtin, director of the survey, said in the report.
