Having been widely mocked - and quantitatvely denigrated by Goldman Sachs - this morning's final print for UMich consumer sentiment for March is now a must watch.
As a reminder, Goldman explained that the Michigan measure has been especially susceptible to the tariff news recently for three reasons.
First, inflation expectations in the survey have become extremely partisan.
Second, the share of respondents in the Michigan survey who are Democrats has always been consistently higher than the share of respondents who are Republicans
Third, switching from a phone-based to an online-based data collection process has led to more extreme answers on inflation expectations.
These three issues together have boosted short-term inflation expectations in the Michigan survey by about 1.3pp and long-term inflation expectations by 0.5pp since 2024Q4. In particular, the change in distribution across political parties and increased partisanship together generated an outsized 1.0pp boost to the 1-year inflation expectation in February.
So, with all that in mind, let's see what the final data looks like - did it get even crazier?
The short answer is - YES!
UMich 1Yr inflation expectations rose to 6.5% (slightly better than the 6.8% expected but still the highest since Nov 1981) while the 5-10Y expectations jumped to 4.4% - the highest since June 1991...
Source: Bloomberg
The gaping chasm of propaganda-driven fear is evident below the surface with Republicans expected 0.4% inflation while Democrats expect - wait for it - 8.0% price rises in the next year (Independents also saw inflation expectations rising)...
Source: Bloomberg
Source: Bloomberg
Bear in mind that Democrat's 1Yr inflation expectations are now more than 2 times higher than they were in June 2021 when inflation would actually rise to 9%. Back then the Democrats were only off by a factor of 3x.
The final April sentiment index declined to 52.2 from 57 a month earlier, but this was considerably better than the 50.8 preliminary number and the median estimate of 50.5 in a Bloomberg survey of economists.
"While this month’s deterioration was particularly strong for middle-income families, expectations worsened for vast swaths of the population across age, education, income, and political affiliation," Joanne Hsu, director of the survey, said in a statement.
“ Consumers perceived risks to multiple aspects of the economy, in large part due to ongoing uncertainty around trade policy and the potential for a resurgence of inflation looming ahead."
The survey showed the expectations index plunged 11.4 points, the sharpest drop since 2021, to 52.6 this month. The current conditions gauge decreased to a six-month low of 63.8.
Source: Bloomberg
After five straight months of disappointments, April saw the biggest beat for headline UMich sentiment since June 2024...
Source: Bloomberg
“ Labor market expectations remained bleak,’’ Joanne Hsu, director of the survey, said in a statement.
“ Even more concerning for the path of the economy, consumers anticipated weaker income growth for themselves in the year ahead. Without reliably strong incomes, spending is unlikely to remain strong amid the numerous warnings signs perceived by consumers.”
Compare UMich's survey for the longer-term inflation expectations, according to Democrats, to what the market is pricing in...
Source: Bloomberg
Is it really any surprise that even Fed Chair Jay Powell dismisses this survey's farcical numbers as a partisan outlier.
