The preliminary University of Michigan Consumer Sentiment Index plunged for a second month in a row to 71.0 after the final 89.1 in March and near-term peak of 101.0 in February. In March, the decline in confidence was weighted toward the six-month outlook and less in current conditions. In April the composition shifted to sharply worsening current conditions as the contraction in the labor market has been dramatic during a period of measures to insulate against the spread of COVID-19.
The index reading was the lowest since late 2011 when the economy was still trying to emerge from recession with any vigor. Consumer sentiment is probably not done in its downward movement as pandemic containment requires ongoing avoidance of social contact and periods of unemployment lengthen.
Plunges in gasoline and other energy prices are probably the main reason behind the fall in the 1-year inflation expectations measure to 2.1% in April after dipping to 2.2% in March. However, prices are anticipated to rise more normally in the 5-year measure with a two-tenths increase to 2.5% in April.
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