WASHINGTON — US consumer sentiment worsened in May as Americans grew concerned about the economy's direction and a potential default of the US government's debt, according to a preliminary report from the University of Michigan Friday.
The political impasse over raising the debt ceiling has dragged on for weeks and is inching closer to the day the federal government will not be able to fully meet its financial obligations. Consumers are now taking notice.
"While current incoming macroeconomic data show no sign of recession, consumers' worries about the economy escalated in May alongside the proliferation of negative news about the economy, including the debt crisis standoff," Joanne Hsu, director of the surveys of consumers at the University of Michigan, said in a release. "If policymakers fail to resolve the debt ceiling crisis, these dismal views over the economy will exacerbate the dire economic consequences of default."
The latest survey showed that the university's consumer-sentiment index fell by 9% in May. The index has now wiped out more than half of its gains since recovering from an all-time low in June 2021.
Pessimism among consumers can have an impact on their spending behavior if their expectations worsen and they decide to pull back.
At the same time, the Conference Board's sentiment survey showed that consumer confidence worsened in April as Americans became more worried about the jobs market. The business group's Consumer Confidence Index, which measures attitudes toward the economy and the job market, fell to 101.3 in April, down from 104 in March and marking the lowest level since July 2022.
The-CNN-Wire
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