The numbers: The University of Michigan’s gauge of consumer sentiment fell sharply to a record-low reading of 50.2, down from a May reading of 58.4. Economists polled by the Wall Street Journal had expected an June reading of 59.
The level is comparable to the low point reached in the middle of the 1980 recession, the university said.
Americans’ expectations for overall inflation over the next year rose to 5.4% in June from 3.3% in May, while expectations for inflation over the next five years jumped to 3.3% from 3% in the prior month.
That’s the highest level since 2008, according to Kathy Jones, strategist at Charles Schwab.
Key details: According to the Michigan report, a gauge of consumers’ views on current conditions tumbled to 55.4 in June from 63.3 in the prior month, while a barometer of expectations fell to 46.8 from 55.2.
Big picture: Higher gasoline prices and overall inflation are weighing on sentiment. The share of consumers citing inflation as the biggest reason for their negative outlooks was the highest since 1981, said economists at Contingent Macro.
What are they saying: “Grim, but spending and sentiment have diverged,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “Sentiment matters to politicians, but spending matters to the economy.”
Market reaction: U.S. stocks
were trading sharply lower on Friday after a sharp rise in consumer prices in May.
Read on: ‘We’re in technical recession, but just don’t realize it’: Bank of America sees more ‘shocks’ to come