Economic observers pay attention to the consumer’s condition.
Amidst trade-related uncertainty, it continued to weigh US consumer sentiment by strengthening economic and inflation concerns.
Respondents’ views on the current economic situation fell by more than 6%, but their expectations took 10%.
Despite the sharp declines from March to April, measurements were better than consensus predictions, suggesting that months of weakening could be stable.
A widely viewed monthly survey highlighted that forecasts for a broader economic situation have plummeted 32% since January, the sharpest decline since the 1990 recession.
Consumers predict a range of risks to the outlook for the US economy, including revival of inflation and weak labor markets. They also hope for slower revenue growth in the future. This is what Joanne Hsu, director of consumer research, says he will look at consumption trends.
Related Stories
“Without a strong income, spending is unlikely to be strong among the numerous warning signs that consumers perceive,” HSU said in the report.
According to the University of Michigan, the inflation outlook for the year accelerated from 5% to 6.5%, making it the best reading since 1981. Long-term inflation expectations rose conservatively from 4.1% in March to match the three-year highs in April.
The expanded degradation of the consumer sentiment index was prominent in middle-income households, but concerns were widespread and affected various ages, education, income and political affiliation groups.
Many studies have shown balloon surprises, whether inflation or employment.
Focus on consumers
This month, the Wallethub Economic Index slipped nearly 8% and forced a scale of spending planning as more consumers became less confident in their financial outlook.
“This decline is so severe that consumer sentiment is at the fourth lowest point in the last five years,” Wallethub said in a survey.
The report revealed that the proportion of consumers expecting to buy cars in the next six months is down 13% compared to last year. Plus, fewer shoppers will be making large purchases in the coming months.
Consumers have supported the economy since the aftermath of the coronavirus pandemic. Analysts fear that if shoppers are cutting, growth outlook could be under pressure if many companies are forecasted on revenue calls.
“Consumers continue to be resilient in spending and their eyes are more discerning,” Mason said.
People will shop at a grocery store in New York City on June 20, 2024. Samira Bouaou/The Epoch Times
“We are moving towards essentials and away from travel and entertainment.
Ultimately, for now, consumers are “not worried,” said Nancy Tengler, CIO and CEO of Laffer Tengler Investments.
“Bofa and Citi said consumer spending increased in the first quarter, when concerns about tariffs and the economy were rising,” she said in a memo emailed to the Epoch Times. “JPM said last week that credit and debit card spending has risen, but that spending has been significantly delayed in the weeks following the end of the quarter.”
Market watchers believe this trend is attributed to panic purchases as shoppers launched tariffs on frontrunner President Donald Trump.
Consumer spending could collapse in the coming months, but conditions could be better than expected if actual (inflation-adjusted) wage growth continues.
“Although it’s slowing down, the increase in total workforce revenue continues to outweigh inflation,” Moody said. “As long as the labor market continues, higher tariffs will bite and possibly bite from consumer spending, but the growth of actual labor income remains a key support.”
Ultimately, the tariff-related impact on spending will become more clear in the coming months, says Ted Rothman, senior industry analyst at Bankrates.
“There is still a lot of uncertainty about the path to advance,” he said in a statement in the Epoch Times.
