Citing renewed concerns about the trajectory of the economy, the University of Michigan released a report on Friday showing U.S. consumer sentiment deteriorated by much more than anticipated in the month of May.
The report said the consumer sentiment index tumbled to 57.7 in May from 63.5 in April, while economists had expected the index to edge down to 63.0.
With the much bigger than expected decrease, the consumer sentiment index slumped to its lowest level since hitting 56.8 last November.
“While current incoming macroeconomic data show no sign of recession, consumers’ worries about the economy escalated in May alongside the proliferation of negative news about the economy, including the debt crisis standoff,” said Surveys of Consumers Director Joanne Hsu.
She added, “Throughout the current inflationary episode, consumers have shown resilience under strong labor markets, but their anticipation of a recession will lead them to pull back when signs of weakness emerge.”
The steep drop by the headline index came as the current economic conditions index fell to 64.5 in May from 68.2 in April, while the index of consumer expectations slid to 53.4 from 60.5.
Hsu also said year-ahead inflation expectations receded slightly to 4.5 percent in May after spiking to 4.6 percent in April.
Meanwhile, long-run inflation expectations rose to 3.2 percent in May from 3.0 percent in April, reaching their highest reading since 2011.
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