University of Michigan: US consumer confidence hits 11-year low

However, household spending remains underpinned by a stable labor market and saving money of the people, is considered a factor that will help the economy continue to develop.

The University of Michigan survey, released on May 13, shows that US consumer confidence has declined across all factors such as demographics, geography and politics. Petrol prices and the stock market also accounted for the majority of this survey.

The index fell 9.4% to 59.1 in early May 2022, its lowest level since August 2011. Meanwhile, economists polled by Reuters had forecast a drop to 64. The sharp drop was in stark contrast to the Conference Board’s consumer confidence survey, which remained unchanged. above the lowest level recorded during the COVID-19 pandemic.

The Conference Board’s survey focuses more on the labor market, which is creating a lot of jobs. Wages are also rising as employers compete to fill the 11.5 million open positions as of the end of March 2022.

The University of Michigan’s index of current economic conditions fell 8.4% to 63.6, its lowest level since 2013, and 36% of consumers said inflation was the cause of their distress. more important. The consumer expectations index fell 9.9% to 56.3.

However, it seems that economists are not surprised and note that consumers are using at least $2 trillion in savings accumulated during the pandemic.

Robert Frick, an economist with the Navy Federal Credit Union (NFCU) in Vienna, Virginia, said consumer spending continues to grow, driven by high savings, low household debt and a market With a strong job market, this activity will continue.

The American Automobile Association (AAA) said gasoline prices continued their upward trend this month, averaging at $4,432 per gallon on May 13. Fears that the US Federal Reserve (FED) would have to drastically tighten monetary policy to reduce inflation led to a massive sell-off in stocks on Wall Street.

There have been concerns that high inflation and the Fed’s rate hike, starting in March 2022, could suddenly slow growth or even push the economy into recession. The US economy shrank in the first quarter of 2022 due to the impact of the record trade deficit, but domestic demand remained stable.

While inflation is likely to remain high, there are growing signs that price pressures have peaked.

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