The resurgence of inflation is starting to weigh down the perceived health of the U.S. economy, a key survey of American households showed Friday.
The University of Michigan’s index of consumer sentiment fell from 79.4 in March to 77.9 in the preliminary April assessment. Economists had expected it to hold nearly unchanged at 79.
The barometer of current economic conditions dropped to 79.3 from 82.5. The index of expected conditions held up better at 77.0, down from 77.4 at the end of April.
Sentiment had been climbing last year but stalled as the year began. It has been stuck near current levels for four straight months.
“Expectations over personal finances, business conditions, and labor markets have all been stable over the last four months. However, a slight uptick in inflation expectations in April reflects some frustration that the inflation slowdown may have stalled,” said Joanne Hsu, the director of the survey.
Hsu added that many consumers are “reserving judgment” about the economy pending this year’s presidential election. Many expect the election will have a “substantial impact” on the economy, according to Hsu.
Inflation has reignited this year. In the first three months of the year, inflation measured by the consumer price index has run at a 4.6 percent annualized rate, much higher than the 1.9 percent rate in the final three months of last year.
As a result, inflation expectations are rising. In the April survey, the year-ahead expectations rose to 3.1 percent from 2.9 percent in March. The long-run expectations measure increased to 3.0 percent from 3.8 percent.