Graph from my blog, PoliMetrics.
See link for full analysis, additional graphs, commentary: https://polimetrics.substack.com/p/consumer-sentiment-and-inflation
Data from University of Michigan/Bureau of Labor Statistics. Graph made with Claude.
by Public_Finance_Guy
7 Comments
funny how people basically always expect inflation to be higher than it actually is, except when shit really hits the fan (’08 crash, covid spike)
Didn’t know there was some deflation in 2008-09. Probably in part why it was so catastrophic
Hmmm. This cant’ be right, it’s clearly an attempt by some Democrat to cast President Trump in a bad light. We should fire this person and replace them with a Loyal Partyman who will get the chart right.
wild how far consumer expectations deviated from what was actually happening with the economy in 2024, almost seems like a lot of people were spending a lot of money to convince the public that everything was awful, for some reason
This is very interesting, challenges some commonly held perceptions
>United States Michigan Consumer Sentiment. The Index of Consumer Expectations focuses on three areas: how consumers view prospects for their own financial situation, how they view prospects for the general economy over the near term, and their view of prospects for the economy over the long term.
>Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services
Your title seems to conflate these two concepts.
CPI is not a forecast of inflation — it is inflation (or deflation) already observed in consumer prices.
ICE does not directly measure “expected inflation.” Instead, it captures sentiment about financial well-being and the economy in general. People may have concerns about inflation, but the index is broader: it includes job security, income prospects, and macroeconomic outlook.
Consumer Prices vs. Consumer Sentiment is a better title.
great work! consider adding a negative y axis 🙂