The pandemic has broken a benchmark economic survey

Americans are pessimistic about the economy, with consumer sentiment at record lows in June 2022 despite a healthy market.
The University of Michigan's consumer sentiment survey has historically correlated with consumer spending, but has lost predictive power since the pandemic.
A statistical model shows that pre-2020, 13 economic indicators explained 86% of variation in sentiment, but no longer accurately predict it.
Sentiment and spending have become disconnected - people report gloom but are spending freely, so sentiment may not signal recession.
The gap between bad sentiment and economic reality has stabilized, suggesting persistent bad vibes unrelated to actual performance.

economist.com

Relevant topic timeline:

7/25/2023

U.S. consumer confidence hits 2-year high — but recession fears linger

Main Topic: U.S. consumer confidence increases to a two-year high in July, but mixed signals persist. Key Points: 1. Consumers remain fearful of a recession due to interest rate hikes. 2. Consumers plan to buy motor vehicles and houses, but fewer anticipate purchasing major household appliances. 3. Consumers intend to spend less on discretionary services but expect to increase spending on healthcare and streaming services.

8/25/2023

Consumers are growing slightly more cautious about the economy

Americans' attitudes toward the US economy are becoming more tentative as consumer sentiment remains steady, reflecting divergent views on the economy's improvements and concerns about inflation, with inflation expectations remaining higher than pre-pandemic levels.

9/9/2023

Economic Anxiety Persists Despite Falling Inflation

Canadian consumer and business confidence has plummeted to its lowest levels since the pandemic, leading to a disconnect between the state of the economy and the public's negative sentiment, which could be attributed to anxiety-inducing inflation and concerns about rising interest rates as well as worsening structural problems such as unaffordable home prices and stagnant GDP per capita.

9/15/2023

Inflation Bites Into Household Budgets as Aid Runs Dry

A new poll reveals that a majority of Americans have negative views of the economy, citing concerns about rising costs, increased debt, the end of pandemic aid, reduced spending on luxuries, and plans to spend less during the holiday season.

9/15/2023

Consumer Sentiment Dips in September as Consumers Remain Wary of Economy

Americans are feeling uncertain about the economy's direction and are starting to worry about a possible government shutdown, as consumer sentiment dips in September due to concerns about inflation and higher gas prices.

9/21/2023

Little-Known Recession Indicator Suggests U.S. Economy May Already Be in Downturn

The difference between two consumer sentiment measures suggests a slowdown in the U.S. economy, indicating a potential recession.

Topics

Posted 9/7/2023, 11:59:27 AM

The pandemic has broken a benchmark economic survey

Americans are pessimistic about the economy, with consumer sentiment at record lows in June 2022 despite a healthy market.
The University of Michigan's consumer sentiment survey has historically correlated with consumer spending, but has lost predictive power since the pandemic.
A statistical model shows that pre-2020, 13 economic indicators explained 86% of variation in sentiment, but no longer accurately predict it.
Sentiment and spending have become disconnected - people report gloom but are spending freely, so sentiment may not signal recession.
The gap between bad sentiment and economic reality has stabilized, suggesting persistent bad vibes unrelated to actual performance.

economist.com

Relevant topic timeline:

7/25/2023

U.S. consumer confidence hits 2-year high — but recession fears linger

8/25/2023

Consumers are growing slightly more cautious about the economy

9/9/2023

Economic Anxiety Persists Despite Falling Inflation

9/15/2023

Inflation Bites Into Household Budgets as Aid Runs Dry

9/15/2023

Consumer Sentiment Dips in September as Consumers Remain Wary of Economy

9/21/2023

Little-Known Recession Indicator Suggests U.S. Economy May Already Be in Downturn

The difference between two consumer sentiment measures suggests a slowdown in the U.S. economy, indicating a potential recession.