Overview
- The University of Michigan’s consumer sentiment index dropped to a preliminary 47.6, down from 53.3 the prior month, marking the lowest reading on record, according to the survey.
- Macroeconomic gauges look steadier by comparison, with unemployment at 4.3% in March and inflation at 3.3% year over year, creating a gap with what the old “misery index” would predict for confidence.
- One leading view holds that people are responding to the higher price level built up since 2021, with overall prices up roughly 25% since January 2020 and sharp jumps in staples such as used cars, shelter, groceries, and restaurant meals.
- Other pressures still bite even as inflation has cooled, including higher mortgage and car loan rates, gas prices averaging above $4, a tougher entry-level job market, and projections that about 10 million people could lose health insurance by 2028.
- Analysts caution that the price-level link may not fully explain the downturn, noting pandemic-era breaks in old patterns, lower trust in institutions, more negative economic news in social feeds, and wide partisan differences in how people rate the economy.