UMich sentiment came in hot today. Consumers feeling better as gas prices drop and inflation expectations cool off.
This matters because consumer confidence drives spending, and spending is ~70% of US GDP. When people feel wealthier and less worried about prices, they open their wallets.
Energy costs are the most visible inflation signal for regular people. Fill up the tank for less = inflation must be getting better. It's not always rational, but it's real.
Watch the Fed's reaction. If inflation expectations stay anchored, they have more room to pause or pivot. If consumers think prices are under control, that becomes self-fulfilling to some degree.
One survey doesn't make a trend, but this is the kind of data that shifts narratives.
This matters because consumer confidence drives spending, and spending is ~70% of US GDP. When people feel wealthier and less worried about prices, they open their wallets.
Energy costs are the most visible inflation signal for regular people. Fill up the tank for less = inflation must be getting better. It's not always rational, but it's real.
Watch the Fed's reaction. If inflation expectations stay anchored, they have more room to pause or pivot. If consumers think prices are under control, that becomes self-fulfilling to some degree.
One survey doesn't make a trend, but this is the kind of data that shifts narratives.