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Going through more of the latest University of Michigan sentiment data, I put current conditions and expectations on the same chart.

Guess what. Consumers seldom think the future will get any better. However, from June through November of 2024, consumers got their hopes up.

Did people thought Trump would change things for the better and now they have changed their minds?

University of Michigan Consumer Sentiment Overall Index

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University of Michigan Consumer Inflation Expectations

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Inflation expectations spiked in April of 2025 along with reciprocal tariffs.

They have cooled somewhat from a recent high of 6.6 to 4.8 percent. But the point projection in November of 2024 was 2.6 percent.

Tariffs definitely changed people’s attitudes towards inflation.

Inflation Expectations Don’t Matter

It’s a good thing inflation expectations don’t matter because they are elevated.

I have discussed this many times. Even Fed studies show that people react to actual prices, not expectations of them.

Most of this is intuitively logical anyway, but the Fed does not see it.

For discussion, please see my April 25, 2025 post Inflation Expectations Surge

Inflation expectations are the highest since 1981. Stagflation anyone?

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