Consumer sentiment plunged in early May as Americans became more concerned about the health of the economy.
The University of Michigan’s initial May Consumer Sentiment Index (MCSI) slumped 9% from April to 57.7, the lowest level since November and far below what economists had anticipated. The measure of consumer expectations dipped even more, sliding 11.7% to 53.4, and the reading on current economic conditions dropped 5.4% to 64.5. Both of these were also short of forecasts.
"While incoming macroeconomic data show no sign of a recession ahead, consumers' worries about the economy escalated in May alongside the proliferation of negative news about the economy," said Joanne Hsu, director of the school’s consumer survey. She noted that included the standoff in Washington over raising the country’s debt limit.
Hsu added year-ahead expectations for the economy sank 23%, and the longer-term outlook also fell, suggesting consumers feel if a recession comes, it won’t be short-lived.