(Imaginary) American Carnage
Consumer confidence is going from bad to worse while the actual economy is going from pretty good to better.
I hope you had a wonderful Thanksgiving. I have some breaking news: The economy is in good shape and people think it’s terrible and getting worse.
Buckle up for Part 174 of my continuing series . . .
1. Consumer Sentiment
The University of Michigan’s Consumer Sentiment survey released its October numbers last week and The People not only think that the economy is bad, but that it’s getting worse. The overall sentiment index dropped by 4 percent.
The numbers under the hood are even more interesting.
Michigan’s index combines a bunch of survey data. It asks people how they feel about their own lives and about the broader economy. The survey’s director, Joanne Hsu, notes that the October numbers showed that people feel pretty good about about their personal finances—but that the overall drop was powered by a big decline in people’s expectations for future “business conditions.”
Hsu also explains what consumers are thinking about inflation:
Year-ahead inflation expectations rose to 4.5% this month, up from 4.2% in October, reaching its highest reading since April 2023. Long-run inflation expectations rose from 3.0% last month to 3.2% this month, a reading last seen in 2011.
Meanwhile, back in reality, here’s the Wall Street Journal the week before explaining what’s going on with inflation:
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