Bidenomics Collapses: Consumer Confidence Takes Unanticipated Dive in Largest Recorded Miss

The University of Michigan recently published a new evaluation of Bidenomics, and the results were far from encouraging. To the surprise of perhaps only the White House's oldest resident, Sentiment took an unexpected dive from 77.2 to 67.4, marking a 9.8 point drop, the largest since August 2021.

Record-breaking Miss

This was not only a 7-sigma miss to the anticipated 76.2 print, but it also marked the largest miss ever recorded! The dip in sentiment was widespread, severely affecting both current conditions - which plummeted from 79.0 to 68.8, significantly missing the projected 79.0 - and expectations, which fell from 76.0 to 66.5, well below the estimated 75.0.

Decline in Sentiment

The sentiment decline was consistent across age, income, and education groups, and also indicated growing worries about high interest rates. Despite the labor market driving economic growth over the past year, the pessimistic assessment in the report supports evidence of a slowdown. Joanne Hsu, director of the survey, expressed concern over the softening in labor market expectations, which have been the main support for robust consumer spending over the past few years. If this trend continues, it may result in consumers' reduced willingness to spend.

Inflation Outlook Deteriorates

However, there's more. The UMich report also confirmed that inflation isn't far behind, with the inflation outlook suddenly deteriorating quite dramatically. 1Year inflation expectations leaped from 3.2% to 2.5%, the highest since November 2023 (and significantly above estimates of 3.2%), while 5-10 Year inflation expectations also rose from 3.0% to 3.1%, the highest since November.

Buying Conditions and Financial Perceptions

The university's measure of buying conditions for durable goods, some of which are financed, also fell to a one-year low. Furthermore, consumers' perception of their financial situation, as well as short- and long-term economic outlooks, decreased this month. Hsu noted that consumers expect the financial strain to continue, as expectations for interest rates deteriorated considerably this month. Only one quarter of consumers expect interest rates to fall in the year ahead, compared with 32% in April.

Verdict on Bidenomics

In conclusion, the verdict for Bidenomics is in and it's a complete disaster. As for Powell's recent comment that he can't see the "stag" or the "flation"... well, Fed chair, it just bit you on the ass.

Final Thoughts

This recent report certainly gives us a lot to think about. What are your thoughts on this matter? Do you agree with the assessment? Share this article with your friends and engage in the conversation. Remember, you can sign up for the Daily Briefing, which takes place every day at 6pm.