The numbers: Rising inflation has cast a shadow over the U.S. economic recovery as Americans pay higher prices for a variety of goods and services ranging from steaks to used cars to plane tickets, according to a closely followed consumer survey.
The second and final reading of the consumer sentiment index edged up a tick to 82.9 from an initial 82.8, the University of Michigan said Friday. But it was still down sharply from a 13-month high of 88.3 in April.
All three major surveys of consumer confidence fell in May owing to worries about higher prices.
Read: Why aren’t Americans happier about the economy? They are paying higher prices for almost everything
Big picture: For the first time in arguably decades inflation is on the minds of everyone from Main Street to Wall Street to Washington. Prices are soaring after years of hardly any inflation.
Read: U.S. inflation hasn’t been this high since 2008
The Federal Reserve, the nation’s inflation watchdog, insists prices will come back down once the economy is mostly healed, pentup demand is satisfied and the global pandemic fades.
The process could take a year or more to play out, though, and keep the debate over inflation raging.
Read: The U.S. economy has suffered a few missteps. Just how bad is it?
Key details: The surprise decline in consumer sentiment in May was triggered by sudden worries about inflation. Consumer prices have surged this year and jumped more than 4% in the past 12 months — a 13-year high.
Americans are paying more for virtually everything: groceries, gas, appliances, sporting goods, used vehicles, auto insurance, vacation rentals and so on. That’s eating away at their paychecks and some of their hefty savings.
Read: Used-car prices soar and the sticker shock may get worse
The result: The attitude of Americans right now about their personal finances and broader economy is somewhat subdued despite a huge decline in coronavirus cases. The so-called index of current conditions declined to 89.4 in May from 97.2 in April.
Consumers were also uncertain about what the next six months would bring. The expectation index slipped to 78.8 this month from 82.7 in April.
What they are saying? “Record proportions of consumers reported higher prices across a wide range of discretionary purchases, including homes, vehicles, and household durables,’ said Richard Curtin, chief economist of the survey.
Market reaction: The Dow Jones Industrial Average
rose in Friday trades. Stocks held onto gains after the sentiment results.