Fear of inflation

Consumer climate in the USA deteriorates unexpectedly

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Americans are becoming increasingly worried about rising inflation. The mood among consumers is shifting accordingly.

"Republicans no longer appear to be as optimistic as they were shortly after the presidential election, while Democrats continue to worry about the impact of Trump's economic policies," said Joanne Hsu, head of the survey, in a statement. "Sentiment among Republicans fell for the first time since August, and among Democrats it continued to deteriorate to its lowest level since 2020." Independent voters have also become more pessimistic.

Fears of higher inflation triggered by tariffs have weighed on sentiment, the university said, explaining the rise. Both the assessment of the current situation and expectations became gloomier.

The consumer sentiment survey conducted by the University of Michigan fell by 3.3 points to 67.8 points compared to the previous month, as the university announced on Friday following an initial estimate. This is the lowest level in seven months. Economists had expected 71.8 points.

Consumers expect 4.3 percent inflation
Consumers' inflation expectations rose sharply in the short term. Over the next year, they climbed from 3.3% in the previous month to 4.3%. Longer-term expectations rose from 3.2 percent to 3.3 percent.

The indicator from the University of Michigan measures the purchasing behavior of US consumers. It is based on a telephone survey of around 500 households. The survey covers the assessment of the financial and economic situation as well as the corresponding expectations.