UMich Is Worried About "Consumer Resilience" As Sentiment Tumbles To September Lows

Tyler Durden's picture

We were wrong: several minutes ago when we documented the collapse in the Gallup Economic confidence, we said that "we look forward to the UMich confidence report to beat expectations when it is released in just a few minutes." Moments ago the official print came out and it was not pretty: sliding from 91 to 89.7, not only did the print miss expectations of a rebound to 92.0, but was the lowest print since September 2015, as well as the fourth consecutive drop.

The reason for the drop? Consumers reported a slowdown in expected wage gains, weakening inflation-adjusted income expectations, and growing concerns that slowing economic growth would reduce the pace of job creation.

And as UMich calculates, "the data now indicate that inflation-adjusted personal consumption expenditures will grow by 2.5% in 2016." Hardly a glowing endorsement of the 2.7% quarterly GDP growth needed to hit the Fed's optimistic forecast.

This is what the report said:

Consumer confidence continued its slow overall decline in early April, marking the fourth consecutive monthly decline. To be sure, the sizes of the recent losses have been quite small, with the Sentiment Index falling just 2.9 Index-points since December 2015, although it was down 6.2 Index-points from a year ago and 8.4 points below the peak in January 2015. None of these declines indicate an impending recession, although concerns have risen about the resilience of consumers in the months ahead.

 

Consumers reported a slowdown in expected wage gains, weakening inflation-adjusted income expectations, and growing concerns that slowing economic growth would reduce the pace of job creation. These apprehensions should ease as the economy rebounds from its dismal start in the first quarter of 2016. Overall, the data now indicate that inflation-adjusted personal consumption expenditures will grow by 2.5% in 2016.

Add to this the concern about rising gas prices that was voiced by Gallup and suddenly you have a very troubling picture of the US economy.

But perhaps most troubling for the Fed is that while 1 year inflation expectations remained unchanged at 2.7%, the 5 year forward forecast dropped from 2.7% to 2.5%, implying that whatever the Fed is doing to boost expectations of rising prices is not working.

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Hohum's picture

Sure, but the Empire Fed survey is great.  Bullish!

Momauguin Joe's picture

Not to worry. Trump will make America "Great" again, LOL

LowerSlowerDelaware_LSD's picture

Why is UMich fretting over this trivial stuff - jobs, the economy, people's livelihoods, and the like - when there are people writing "Trump 2016" in chalk on sidewalks?!?!?!

Safe space violations, UMich... safe space...

Never One Roach's picture

I love Ann Arbor and UM but it's befuddling how they do their polls. Most people I talk to across the nation have never been more pessimistic---from librarians to businessmen, from students at Ivy League shcools to those at community colleges, blacks and whites, hispanics and Asians.

 

Yet the media keeps the circus going with unrealisitc 'everything is awesome' and 'Obamacare is great' from every corner of the map.

blown income's picture

Look around you feel confident? 

 

 

I sure as fuck don't 

chunga's picture

Oh yeah it's great out there.

An economy that runs on pure FRAUD with a handful of cronies using other people's money to play "Flip that Stock" via HFT. I'm hoping for enough helicopter money to permanently disconnect from the electric co. and go even moar Galty.

arby63's picture

You got that right. High octane fraud. Everything and everywhere. It's amazing to watch the middle class dwindle away and the fraud just picks up pace.

Theonewhoknows's picture

Politics, economics and media - they all in the gutter. We have to ask ourselves a question what can we do about it HERE AND NOW. We all know that the ship is going down but the music keeps playing but what we should be thinking about is how not to be swept by the wave of bad consequences developed world indebtedness, bubbles in many corners of market and war on cash. Playing a bear against central banks may be very hard on the other hand, prolonging this binge QE-driven bubbles equals meeting a wall sooner or later. http://independenttrader.org/is-time-to-short-already-here.html

Phillyguy's picture

How can the economy “rebound” and personal consumption expenditures “grow” under conditions of declining Capex, declining wages and anemic job growth? > 90% of “new” jobs are temp positons- read low pay, no benefits and no job security- perfect candidates for sub-prime auto loans. The reason why there is low inflation is because of slack demand- working people are earning less and their purchasing power had declined. Six years of the FEDs QE program, transferring > $4 trillion of public money to banks and large corporations, has created gigantic financial bubbles in stocks and real estate, but has done nothing to stimulate the broader economy. See: Central banks have it all wrong with their focus on cutting interest rates; Link: www.marketwatch.com/story/central-banks-have-it-all-wrong-with-their-foc...

Bill of Rights's picture

I'm confident...none of this matters.

wmbz's picture

"although concerns have risen about the resilience of consumers in the months ahead".

"Consumers" Never underestimate the great Amerikan consumer.

That is all they live for, the big fat lard asses park in the handicapped spaces and rome the malls weekly. Their garages are full of shit so they rent storage spaces.

Most of them remind me of "Fat Bastard" from the Austin Powers movie.

I am Jobe's picture

Michigan is Third World then again Amerika is turing out to be that. 

o r c k's picture

Better Jobe than Jobeless.

A_DAB_will_do's picture

Speaking for myself, I've survived two layoffs by my employer so far in 2016.  I know my confidence is way, way up!  /sarc