Preliminary reading of the consumer confidence index of the University of Michigan, published on Friday, decreased 2.7% in monthly terms reaching 50.8, only major than June 2022. Since January, the referential has fallen almost 30%.
The impact of tariffs on consumers
Americans have largely adopted a pessimistic vision on the course of the economy after the imposition of huge import tariffs by Trump’s government, which threatens to stop growth and increase prices. In recent weeks, the White House has retreated in its policies, although average tariffs remain high compared to historical standards.
The Republican had imposed 145% tariffs on all imports of Chinaa measure that, in fact, suspended trade with the third largest commercial partner in the United States in goods. But on Monday both countries said they had reached an agreement that would reduce US tariffs to 30%, while China would reduce their taxes to US exports to 10%.
The survey was conducted between April 22 and May 13, which includes only two days of the period after the reduction of tariffs to the Asian giant.
However, on Thursday, Walmart said he had begun to increase prices In response to tariffs and that would do it even more in June and July, just when families prepare for the return season to classes. The company serves 90% of the population of the United States, and the price increases in the largest retailer in the country could begin to affect Americans who have already been harmed by inflation of the period after the pandemic.
Inflation expectations in the US grow: way to a self -fulfilling prophecy?
In the survey it was found that Consumers feel increasingly concerned about increasing inflation. During the next 12 months, they expect it to jump to 7.3%the highest since 1981 and above a 6.5% expectation last month.
Those expectations They are usually higher than real inflation, which last month was reduced to 2.3%the lowest level in more than four years. Even so, economists and the Federal Reserve closely observe Inflation expectations because they can become a self -complicated prophecy. If people are concerned that inflation accelerates, it can take measures, such as demanding higher wages, which could increase prices.
The president of the Federal Reserve, Jerome Powell, has said that Michigan’s inflation expectations are an “anomaly.” The measures of future market based on the market, to which some Fed officials give greater importance, have remained most stable. Even so, the constant increase in inflation expectations of the Michigan survey could make the Fed less likely to reduce its key interest rate in the short term.
The perspective of American consumers varies depending on political opinions
Consumer perspectives are also strongly divided by their political opinionswhich has led some economists to question the results of the survey. Likewise, last year, the University of Michigan went from using online responses and by phone to use only those received online, which, according to some analysts, could have introduced a more negative bias.
The trusted index among the Democrats fell to 33.9 this month, the lowest level since the partisan data began in 1980 and well below the levels reached in the most critical moments of the Covid-19 pandemic or during the Great Recession of 2008-2009. Among the Republicans, it is 84.2, although it was reduced from 90.2 in April and is the lowest since Trump’s choice.
Source: Ambito
