Rattled U.S. consumer

Expectations crater

From Tuomas Malinen Geopolitics and the Economy.

Something rather disturbing is happening regarding consumer expectations in the U.S. We presented this today at the Weekly Forecasts of GnS Economics.

One-year-ahead inflation expectations of U.S. households and the 12-month percentage change in the Consumer Price Index (CPI) from January 1978 until April 2025. Source: GnS Economics, University of Michigan, U.S. Bureau of Labor Statistics

We are effectively at a point where we have never been before, with the year-ahead inflation expectations of households breaking (massively) to the upside without the CPI following (immediately at least). The question is, what are they seeing? It could be tariffs, but it could also be something else. We simply have to wait and see what comes. Yet, there’s one even more worrying development in the consumer expectations gathered by the University of Michigan.