Consumer sentiment fell to a record low of 50.2 in early June.
Higher gasoline prices and overall inflation concerns weighed heavily on consumers in early June.
The University of Michigan’s preliminary gauge of consumer sentiment for June plunged 14% to a record-low reading of 50.2, down from a May reading of 58.4. The level is comparable to the low point reached in the middle of the 1980 recession.
“All components of the sentiment index fell this month, with the steepest decline in the year-ahead outlook in business conditions, down 24% from May,” said Joanne Hsu, surveys of consumers director, University of Michigan.
The index measuring consumers assessment of the current economic conditions decreased to 55.4 in June from 63.3 in May. The measure for short-term expectations dropped to 46.8 from 55.2 the previous month.
Consumers' assessments of their personal financial situation worsened about 20%. Forty-six percent of consumers attributed their negative views to inflation, up from 38% in May. This share has only been exceeded once since 1981, during the Great Recession.
Overall, gas prices weighed heavily on consumers. which was no surprise given the $0.65 increase in national gas prices from last month (according to AAA), Hsu noted.
“Half of all consumers spontaneously mentioned gas during their interviews, compared with 30% in May and only 13% a year ago,” she added.
Consumers expect gas prices to continue to rise a median of $0.25 during the next year, more than double the May reading and the second highest since 2015. In addition, a majority of consumers spontaneously mentioned supply shortages for the ninth consecutive month.