Consumer Sentiment Hits 28-Year Low

Consumer sentiment about the state of the economy dropped to a 28-year low in April, according to the Reuters/University of Michigan index.

The survey showed that consumer sentiment fell to 59.5 from 62.6, hitting its lowest point since June 1980. The culprits: High gas prices, a sluggish housing market, and a not-too-great job outlook.

Expectations for inflation over the next year rose to 5.2 percent from 4.8 percent a month earlier, the highest since 1982. Longer-term inflation expectations – over five to 10 years – edged up to 3.3 percent from 3.2 percent.

The increases are "suggesting that higher inflation is slowly starting to become embedded in the economy's psyche," says Paul Ashworth, an economist at Capital Economics.

Source: The Wall Street Journal, Sudeep Reddy (05/17/2008)