CONSUMER SENTIMENT VS. UNEMPLOYMENT
FOR U.S. CREDIT UNIONS | DATA AS OF 08.31.22
SOURCE: UNIVERSITY OF MICHIGAN CONSUMER SENTIMENT INDEX; U.S. BUREAU OF LABOR STATISTICS
- Despite a slight improvement over the summer, consumer economic sentiment in the United States is near its lowest level since the Great Recession, according to data from the University of Michigan’s Consumer Sentiment Index. This general pessimism comes despite near-record low unemployment, which historically moves in the opposite direction of sentiment.
- Inflation, it seems, is a more powerful force than unemployment when driving today’s consumer sentiment. Overall consumer prices are up 8.3% year-over-year, and higher costs of living are impacting Americans’ financial psyche.
- According to behavioral economics, participants’ perception of economic health can become a self-fulfilling prophecy — a worsening consumer sentiment often goes hand-in-hand with the onset of economic recession.
- As the Fed continues to raise interest rates, officials there have suggested that unemployment might rise well above 4% within the next year, which could further dampen consumers’ attitudes about the economy.