EDITOR'S NOTE: A sour public mood it is. American household sentiment on the economy has been on a net decline since 2020. There was a brief uptick in optimism in 2021, perhaps slightly boosting consumer spending, but rising prices on top of war in Europe are weighing sourly on the dour mood. It’s a common market principle that ”sentiment” moves first while fundamentals come later in the game either to validate or to set in place the market’s valuation. The same can be said of the larger economic cycle. Another domain in which this applies might be politics. Washington has done its best to boost America’s economic mood, particularly in the early stages of inflation. While inflation may not be as transitory as promised, what’s likely to prove transitory are the politicians who’ve been feeding the public with the kind of optimism that, ironically, helps get politicians elected.
Morale among American consumers — sometimes referred to as "people" — deteriorated early this month, as the already sour post-COVID mood was not improved by worsening inflation or the arrival of a major European land war.
Driving the news: That University of Michigan survey showed that overall consumer sentiment dropped for the fifth time in the last six months in March, falling to an almost 11-year low.
Why it matters: "Why does anything matter?" our morose average American might ask.
- In all seriousness, the sour public mood suggests that inflation worries have totally eclipsed other indicators that show a pretty strong U.S. economy — such as unemployment at just 3.8%.
- It also bodes particularly ill for elected officials hoping not to be, well, unelected.
Originally published on Axios.