The latest Consumer Sentiment Index for March from the University of Michigan is out, and consumers are not optimistic about the economy. The measurement registered its first drop in four months as inflation and turmoil in the financial sector add to economic uncertainty.
We’ve already seen evidence that consumers are fairly pessimistic about certain parts of the economy. But it’s not all doom and gloom.
One thing that remains clear, though, is that inflation remains a giant economic buzzkill.
“Yeah, I don’t think anyone’s comfortable with such high prices,” said Jennifer Lee, senior economist with BMO Capital Markets.
In the longer term, early survey data from the University of Michigan found that people expect less inflation.
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“It shows that consumers are probably thinking that we’re finally starting to get a handle on inflation,” Lee said.
People are also more optimistic when you ask them about jobs, said Ataman Ozyildirim at the Conference Board, which also surveyed consumers recently.
“In terms of their expectations, six months hence, consumers were slightly more positive about labor market conditions,” he said.
Ozyildirim also thinks people are planning to spend less on highly discretionary purchases.
“Categories that you could give up easily, like playing the lottery, or visiting amusement parks, even going to the movies,” he said.
On the other hand, people say they plan to spend more on necessities including health care, auto maintenance and home repair.