The economy appears to have avoided dire predictions, though consumer pessimism remains prevalent. As of early August, 62% of consumers anticipate worsening unemployment. Many fear an inflation resurgence despite current CPI rates. Economic conditions differ markedly from the last major downturn. Although the unemployment rate is low at 4.2% and consumer spending patterns remain healthy, hiring has stalled and layoffs are minimal. Ultimately, consumers continue to brace for a potential economic decline, reflecting sentiments similar to those in the Great Recession.
Although CPI inflation has not surged, our data show that consumers are still bracing for an increase in inflation to come. Moreover, consumers are also concerned that labor markets will weaken.
About 62% of consumers believe unemployment will worsen in the year ahead, according to the University of Michigan's latest monthly survey. That's bounced around a little in the last few months, but consistently hung around levels not seen since the Great Recession.
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