The US consumer mood drops to the second lowest level on the records that go back to 1952

Washington
Cnn
–

The Americans are rarely so pessimistic about the economy.

The consumer mood this month fell 11% on a preliminary reading of 50.8, the University of Michigan shared the second lowest reading of records on 1952 in its latest survey, which was published on Friday.

The volatile trade war of President Donald Trump, who threatens a higher inflation, has significantly burdened the moods of the Americans in recent months. According to the survey, this discomfort deteriorated in Trump’s announcement in the past week of comprehensive tariffs.

“This decline was unanimously and unanimously and unanimously, as in the last month of an age, income, education, geographical region and political belonging,” said Joanne HSU, director of the survey, in a press release.

“Sustiment has lost more than 30% in the middle of growing worries about trade war developments that have weakened over the course of the year,” she added.

The Federal Reserve and Wall Street observe exactly how acidic, how acidic, that the consumer expenditure spends themselves, which makes up for about 70% of the US economy and whether the Americans lose trust that inflation will be normalized again in the coming years.

Trump kept his massive increase in tariffs on dozens of countries on Wednesday, but kept a basic obligation of 10% for all imports to the USA and separate tariffs for certain products and raw materials. The so-called mutual tariffs, albeit short-lived, were the sharpest increase in the US tasks that have ever returned from 200 years, FITCH Ratings told CNN

However, China was not included in Trump’s Tarrevieve and continued a controversial time between the two largest economies in the world, which extended on Friday, with Beijing increasing its retaliation tariffs for US imports to 125%.

Michigan’s survey was presented between March 25 and April 8, so that the respondents’ reaction to the recently announced tariff delay was not recorded.

The relationship between feeling and expenditure

In economics, surveys are referred to as “soft data” and capture measures that collect the actual economic activities such as retail sales are referred to as “hard data”.

The soft data has significantly deteriorated due to Trump’s tariffs: Michigan’s latest survey showed that “the proportion of consumers who increase unemployment in the coming year in the fifth month in a row, and now more than twice as high as the reading of November 2024 and the highest since 2009”.

However, the hard data still looks decent. Employers continue to set fleet pace, and the buyers have not yet convincingly restricted in their expenses, although retail sales have recently become weaker than expected.

“Sometimes the surveys are very negative, but they continue,” said Fed chairman Jerome Powell last week at an event near Washington, DC. “People spent pandemic correctly and spent them in higher inflation during this period.”

The expenditure of Better-off-off-Americans has played a key role in the sums of the US economy in recent years, but the latest turbulence on Wall Street, which is triggered by Trump’s tariffs, is threatened.

“Despite high prices in 2024, the profits of the wealthy stock markets of consumers grow, but the rich will not be confident enough to continue to spend if this stays up to date,” wrote Bill Adams, Chief Economist at Comerica Bank, in a recently carried out analyst.

There is a survey -based measure that is very important for the Fed: the perception of the prices of the Americans. It is critical because they can fulfill themselves, how do people expect inflation to climb in the long term and will remain increased in the long run, they adapt their expenses accordingly.

So far, this measure had entered the wrong direction: expectations of the inflation rates in the coming year rose from 5% in March to 6.7% this month, while the highest level since 1981, while expectations for the next five to ten years rose from 4.1% to 4.4%.

If people lose belief that inflation will ever become normal again in the coming years, it would make it extremely difficult for Fed’s monetary policy to combat inflation.

“History teaches that the labor market is weaker and that the economic scars are deeper when higher inflation expectations are firmly anchored that is longer to the price stability,” said the President of Dallas, Lorie Logan, on Thursday at an event in Dallas.

Nowadays, the inflation expectations are more susceptible than usual to become “casual”, since consumers experienced a time with high inflation and many Americans remained particularly sensitive to increased prices.