ANN ARBOR (5/18/15)--The University of Michigan’s consumer sentiment survey took an unexpected turn for the worse in May, crumbling by 7.3 points to 88.6, the largest drop in two years (Economy.com May 15).
The current conditions subcomponent dropped by 7.2 points to a six-month low, as only 39% of respondents said their personal finances were better now than they were a year ago, down from 47% the prior month.
Further, 32% said they were in worse financial shape than a year ago, a 5% increase.
“First-quarter weakness may also be bleeding into shoppers’ perceptions of current finances,” said Nate Kelley, Moody’s analyst (Economy.com May 15). “To be sure, employment missed expectations in the first quarter for many of the same reasons growth slowed in the beginning of 2014.”
Thirty-two percent of respondents reported that their income was higher than a year ago, down from 35%, while 26% said lower incomes have damaged finances, up from 22% the prior month.
Additionally, 14% said higher prices have contributed to their waning confidence over finances, the highest percentage since November.