US consumer sentiment just hit a record low.
Not a multi-year low. Not a cycle low. A record low.
When households are more pessimistic than at any point we have data for, that’s not a blip worth dismissing. That’s a signal worth listening to.
The details are even more concerning than the headline. Both current conditions and future expectations collapsed to historic lows. Gasoline prices remain a central pressure point, sharply higher since early-year geopolitical disruptions. Inflation expectations are rising, including long-term expectations, raising the specter of entrenched inflation. A growing share of households say high prices are actively eroding their finances
Inflation worry is no longer confined to lower-income households. It’s broadening across income levels, across political lines. Americans increasingly believe the inflation problem has spread beyond energy and into the broad cost of living.
Eventually, pessimism becomes behavior. Worried consumers become cautious consumers. And cautious consumers spend less.
