Consumer Sentiment Matters More Than Inflation and Unemployment Numbers–And It Has Never Been So Bad for So Long

Much like the unemployment rate, inflation numbers can miss the mark on properly reflecting a country’s economic mood because these figures offer an incomplete picture of a country’s economic health.

Consumer sentiment, on the other hand, reflects our attitudes about the current state of the economy and expectations about its trajectory. And by all accounts, consumer sentiment is at record lows–and its decline has been more protracted than during past dips.

In June, the University of Michigan Survey of Consumer Sentiment reported the lowest-ever level of consumer sentiment on record–even worse than that during the “stagflation” in the late 1970s or the financial crisis in 2008. Additionally, it reported the highest level since the late 1970s of expectations for future inflation of 5.3% or more.

There is preliminary evidence that consumer sentiment has been higher in August–but much of the recovery could be seasonal and it seems unlikely that it will last.

Continue reading the entire piece here at Fortune Magazine

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Christos A. Makridis is an adjunct scholar at the Manhattan Institute. He is also a research professor at Arizona State University and the chief technology officer and head of research of Living Opera, an arts and education technology startup.

This piece originally appeared in Fortune