Bloomberg has a piece looking at why US consumers seem to be in a “foul mood,” suggesting that nobody really is paying attention. Which could be a problem.
From the story’s lede:
“Every month, thousands of randomly selected Americans get a letter in the mail from the University of Michigan asking how they’re feeling. This year their answers have been pretty unambiguous: bad.
“They’ve been feeling bad about prices, bad about business conditions. Bad about their incomes and job security, the housing and stock markets. They’ve felt so bad, in fact, that Michigan’s Index of Consumer Sentiment was stuck at one of its worst readings on record for two months this spring after plunging 29% in the first four months of 2025. Over the 79 years of the survey, a drop this large this fast has almost always predicted a recession. Sentiment readings improved slightly at the start of June but still indicate Americans expect much higher prices and a much slower economy in the coming year.
“‘When all the signals are pointing the same way, I think we need to take the consumer seriously,’ says Joanne Hsu, the director of the University of Michigan’s Surveys of Consumers. ‘It’s just really dangerous to overlook’.”
Overlooking these signals, however, is exactly “what Wall Street has been doing, as stocks have continued to perform well,” and “hard economic data like jobs are mostly holding up.” Leading some to believe that pessimism has been overstated.
Bloomberg writes that “it’s clear to Hsu – who in 2022 became the survey’s first new director in 46 years – that many investors and analysts don’t really understand the data they’re dismissing. Critics are ‘missing the point,’ Hsu, 43, says during an early June walk across the university’s leafy Ann Arbor campus.
“Rather than only basing their outlooks on news or government data, consumers absorb a gut sense of the economy while going about their days – shopping for groceries, gossiping at work, paying bills. Other factors like age, health and political views can sway their feelings, but that’s a feature not a bug, because those attributes also affect their future spending. And the survey is rarely wrong. In 1974, for instance, it spotted the worst recession since World War II, while ever-rising sales of TVs, cars and other consumer goods were tricking economists into thinking things were fine. Even if you discount the accuracy of regular people’s predictions, she maintains, they’re still telling you something important.”
You can read the entire piece here.
KC’s View:
As noted in one of the Eye Openers, below, this is going to be big week in the online retail space – and it may tell us a lot about the consumer mood.
But I think Hsu is right that simple statistics don’t always tell the whole story. People often behave one way, but act another way. Sometimes it is self-delusion, or denial. Or sometimes they’ve been sold a bill of goods, and we live in a world where everybody is selling, all the time. (It is exhausting.)
Read the Bloomberg piece. Context is important, and the University of Michigan Index of Consumer Sentiment is all about context.
The post Worth Reading: The Importance Of Actually Listening To Consumers appeared first on MNB.
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