BIZ-CONSUMER-SENTIMENT-GET

People walk along Fifth Avenue with shopping bags on May 8, 2024, in New York City.听

U.S. consumer sentiment declined in early May to a six-month low as short-term inflation expectations and concerns about the job market picked up.

The sentiment index slid to 67.4 in May from 77.2, according to the preliminary reading from the University of Michigan. The figure was weaker than all forecasts in a Bloomberg survey of economists.

Consumers expect prices will climb at an annual rate of 3.5% over the next year, the highest in six months and up from the 3.2% expected in April, data Friday showed. They see costs rising 3.1% over the next five to 10 years, up slightly from a month earlier.

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The decline in sentiment was broad across age, income and education groups, and also reflected growing concerns about high interest rates. While the labor market has driven economic growth over the last year, the downbeat assessment highlighted in the report adds to evidence of a slowdown.

鈥淪trength in household incomes has been the primary source of support for robust consumer spending over the past couple of years, so a softening in labor market expectations is concerning and 鈥 if it continues 鈥 may lead to a pullback in consumers鈥 willingness to spend,鈥 Joanne Hsu, director of the survey, said in a statement.

The university鈥檚 measure of buying conditions for durable goods, some of which are financed, decreased to a one-year low.

鈥淲orse yet, consumers expect the pain to continue, as expectations for interest rates deteriorated considerably this month,鈥 Hsu said. 鈥淥nly one quarter of consumers expect interest rates to fall in the year ahead, compared with 32% in April.鈥

The current conditions gauge declined to 68.8, while a measure of expectations dropped to 66.5 鈥 both six-month lows.

Consumers鈥 perception of their financial situation, as well as short- and long-term economic outlooks, decreased this month.

Sentiment gauges also provide insight into voters鈥 feelings about the economy and their finances leading up to the presidential election in November.

Confidence deteriorated this month among Democrats, Republicans and independent voters. The latest figures underscore the hurdle President Joe Biden faces in convincing Americans that his policies have helped the economy.

With assistance from Kristy Scheuble

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