If you’re living in the United States today, then chances are you’re scared, and to be frank – YOU SHOULD BE. Consumers’ sentiment has essentially fallen off a cliff and climbing up that cliff is quite the challenge. The facts don’t lie…
Consumer sentiment has fallen to a three-month low, indicating growing concerns among Americans about an impending recession. This is backed by data too.
The University of Michigan reported that the final reading in March was down to 62 from an original 63.4 in the prior month, while the index was at 67 in February. This index is used to gauge how Americans feel about the broader economy as well as their own financial situations.
The feeling is mutual amongst many consumers and they are moving their money out of banks to further prove their lack of faith.
One significant point to note is that the gauge measuring what consumers think about the current state of the economy has dropped to 66.3 in March from 70.7 in the prior month.
Moreover, a measure that asks about expectations for the next six months has declined from a preliminary 61.5 to 59.2. This decline in consumer sentiment is a worrying sign that consumers increasingly expect a recession ahead.
Some believe that the recession is here and those that do are taking action today to protect their savings. Who exactly is concerned? Well, many people are concerned from many generations.
Young and Wealthy Are Most Worried
The concerns are more prominent among younger, lower-income, and less-educated Americans, as well as wealthier people with significant stock holdings. Inflation expectations have also tapered off, with consumers expecting prices to increase by 3.6% in the next year, down from 4.1% in the prior month.
Consumer sentiment remains well below a recent peak of 88.3 in 2021 and a pre-pandemic high of 101. This persistent worry about a recession is not healthy for the economy, reflecting the Fed’s strategy to raise interest rates to tame high inflation, which typically slows down the economy.
The collapse of Silicon Valley Bank and the ensuing turmoil in the U.S. banking system only had a “limited impact,” according to Joanne Hsu, director of the survey. The bigger worry is the potential recession that consumers increasingly expect. This leads many to question what the next move is to protect their savings.
In conclusion, the decline in consumer sentiment is a concerning sign that Americans are worried about the economy’s state and their financial situation. I am scared as well and you should be too. The potential recession is a significant worry as is where inflation is headed and ultimately the economic situation.
Take action BEFORE it’s too late.