After a small dip in April, UMich sentiment was expected to modestly rebound in May but preliminary data shows a huge jump led by a spike in 'hope'.
The headline UMich sentiument survey printed at its highest since January 2004 led by a spike in expectations:
Current economic conditions index rose to 112.4 vs. 112.3 last month.
Expectations index rose to 96.0 vs. 87.4 last month.
When asked about prospective trends in the economy, the expected pace of economic growth did not change as much as
consumers’ subjective assessments. Good times during the year were expected by 62% of all consumers in early May, the
highest figure since 68% was recorded in 2004.
“The proportion of consumers who anticipated an economic downturn in the next five years fell to 36%, the lowest level since 2004.”
Short- and longer-term inflation expectations also soared in preliminary May data (1Y jumping to 2.8% from 2.5% and 5-10Y jumping from 2.3% to 2.6%).
Finally, on the downside, favorable judgements about buying conditions for household durables fell in early May to the lowest level in three years. Consumers voiced less favorable views on product prices and judged buy-in-advance rationales more favorably (perhaps due to the hike in tariffs). Favorable home buying attitudes declined slightly and views on home selling rose slightly due to rising home prices. Vehicle buying attitudes, in contrast, inched upward in early May largely due to more positive price perceptions