Consumer sentiment fell by 14 percent this month as inflation and gas price spikes weighed on consumers, according to the University of Michigan’s June Surveys of Consumers.
Consumer sentiment has consistently declined over the past year and reached its lowest recorded value in June, similar to the lows experienced in the middle of the early 1980s recession, said Surveys of Consumers Director Joanne Hsu. The index of consumer sentiment has fallen 41.3 percent over the last 12 months, current economic conditions by 37.5 percent, and the index of consumer expectations by 44 percent.
The steepest decline in June was in the year-ahead outlook in business conditions, which fell 24 percent from May. Consumers’ assessments of their personal financial situation fell by approximately 20 percent.
Inflation was a key driver of worsening sentiments: 46 percent of consumers said their negative views were due to inflation, up from 38 percent in May. Half of surveyed consumers mentioned gas prices as they increased 65 cents from last month, according to AAA. National gas prices have hit an average of $5 per gallon, according to AAA, far higher than the $3.07 average seen a year ago.
According to the report, consumers expect gas prices to increase at a 25-cent clip over the next year, more than doubling the May reading and the second-highest since 2015. “A majority of consumers spontaneously mentioned supply shortages for the ninth consecutive month,” the report stated.