Vote of less confidence

The alarm bells are ringing as two more downbeat reports on consumer sentiment were released last week.

The first was the March Conference Board consumer confidence index, which plummeted from 100.1 in February to 92.9, its lowest level since January 2021. Its expectations component fell from 75.8 to 65.2, below the 80 level usually meaning a serious economic slowdown is on the way and the lowest level since January 2013.

Worrisome factors riddle the report, but none more so than the increase of year-ahead inflation expectations from 4.7% to 5.1%, a nearly two-year high. Or perhaps respondents’ forecast of the labor market is more concerning.

Perhaps worse was the University of Michigan consumer sentiment survey that arrived Friday. At 57, the index hit its lowest level since 2022. It was 64.7 in February and 79.4 last March.

Year-ahead inflation expectations rose from 4.3% in February to 5.0%, the highest level since November 2022; five-year expectations hit 4.1%, the first time the survey has been more than 4% since February 1993. Lastly, around two-thirds of consumers said they expect higher unemployment in the next year, the highest reading since 2009.

That’s a lot of “highest since” readings.