Consumer Sentiment Remains Mired Near All-Time Low as Current Conditions Sink Further

U.S. consumers remain in a deep funk about the economy.

The University of Michigan’s survey of consumer sentiment showed that perceptions of current economic conditions fell in early August despite lower gas prices pushing down headline inflation in July.

The year-ahead outlook, on the other hand, improved significantly, indicating that U.S. households are not as deeply depressed about the future. Despite the improved outlook, expectations remain far below where they were a year ago.

The index of consumer sentiment moved up “very slightly” to 55.1 from 51.5. The index of current conditions fell to 55.5 from 58.1 a month ago. The index of expected conditions rose to 54.9 from the extremely dim reading of 47.3 in July.

“At the same time, high income consumers, who generate a disproportionate share of spending, registered large declines in both their current personal finances as well as buying conditions for durables,” said Joanne Hsu, the director of the survye.

Expectations for inflation were mixed. The year ahead expectation fell to five percent, down from 5.2 percent in July and 5.3 percent in June. This is still substantially above the 4.6 percent expected a year ago.

The five-year expectation for inflation ticked up to three percent from 2.9 percent, perhaps an indication that consumers think inflation has become more entrenched.