Consumer confidence slipped 7% in May, erasing half the gains since the all-time low last June, the University of Michigan's consumer survey disclosed. Thus far, consumer resiliance has been supported by strong incomes. However, high inflation continues to erode consumers living standards and their confidence in the economy is decidedly negative.
"If the debt ceiling is beached, we will not be able to depnd on consumer resiliance to prop up the economy and avoil the catastrophic economic consequences to follow," was Joanne Hsu, Ph.D., chief economist of the survey. Just how bad is consumer confidence? The Michigan survey found the year-ahead economic outlook plummeted 17% from last month, and long-run expectations slid by 13% as well. About 52% of consumers said the government is doing a poor job with economic policy, the worst reading since last July.
Adding to the gloom, home buying conditions deteriorated dramatically in May. Aboout 80% of consumers said it was a bad time to buy homes, sharply higher than the 73% in April and 77% a year ago.
As we were writing this, Treasury Secretary Janet Yellen said the U.S. Government could run out of cash by June 5. That's slightly better than the June 1 deadline to boost the debt ceiling that had been predicted.