As consumer expectations plummet some choose 'inflation staycation'

Posted at 12:34 PM, May 29, 2022
and last updated 2022-05-29 12:34:50-04

DETROIT (WXYZ) — 7 Action News caught up with Brandon Garwolinski and Michelle Patrick as they tried to catch fish at Belle Isle to talk about the economy.

“It's about time I start growing my own vegetables,” said Michelle Patrick.

“Gas is killing my pocket right now,” said Brandon Garwolinski.

“I have things I need to get fixed on my car and the price of tires have gone up,” said Patrick.

Inflation’s seemingly non-stop sticker shock impacted summer vacation plans.

“Usually we would be going on two weekend trips over the summer. And now we are down to one,” said Garwolinski.

“I was supposed to go out of town this weekend, but gas prices and stuff I have to get fixed on my car. It’s not worth it,” said Patrick.

The University of Michigan Surveys of Consumers released its May Consumer Sentiment Data on Friday. It said 38% of households surveyed complained inflation was hurting their living standards. Consumer expectations for the economy dropped 25.8% for the next year and 14.3% for the next five years.

People are pessimistic.

“This is continuing the trend of about a year-long decline in consumer sentiment,” said Dr. Joanne Hsu, University of Michigan Director of the Surveys of Consumers.

Dr. Joanne Hsu says while people are less optimistic about the overall economy, they are relatively optimistic about their own personal finances. That may indicate why the Bureau of Economic Analysis data released Friday found consumer spending continued to grow. It increased $152.3 billion, or 0.9 percent, in April.

The Federal Reserve will look at and weigh both that information and data from the Surveys of Consumers data as they decide where to set interest rates. Drops in consumer sentiment might predict a drop in demand for goods, which could help fight inflation.

“Historically speaking the sentiment index has been a good indicator for where the economy is going and where consumption is going,” said Hsu.