Preliminary data released by the University of Michigan on Thursday showed a record-breaking decline in U.S. consumer sentiment in the month of April.
The report said the consumer sentiment index plummeted to 71.0 in April after plunging to 89.1 in March. Economists had expected the index to tumble to 75.0.
Surveys of Consumers chief economist Richard Curtin noted the 30-point drop seen over the past two months was 50 percent larger than the prior record.
The steep drop by the headline index came as the current economic conditions index sank to 72.4 in April from 103.7 in March, with the 31.3-point nosedive nearly twice the prior record decline.
The index of consumer expectations also slumped to 70.0 in April from 79.7 in March, although Curtin noted the decrease was not nearly as steep as the record 16.5-point drop in December of 1980.
“This suggests that the free-fall in confidence would have been worse were it not for the expectation that the infection and death rates from covid-19 would soon peak and allow the economy to restart,” Curtin said.
However, Curtin said anticipating a quick and sustained economic expansion is likely to be a failed expectation, resulting in a renewed and deeper slump in confidence.
“Consumers need to be prepared for a longer and deeper recession rather than the now discredited message that pent-up demand will spark a quick, robust, and sustained economic recovery,” he added.
On the inflation front, one-year inflation expectations slipped to 2.1 percent in April from 2.2 percent in March, while five-year inflation expectations rose to 2.5 percent from 2.3 percent.
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