Yesterday, University of Michigan Survey consumer sentiment surprised on the downside, (50.3 vs. 53.0 Bloomberg consensus) along multiple dimensions, including assessments of the current situation (52.3 vs. 59.2 consensus)  and expectations regarding the future (49.0 vs. 50.3 consensus); and is deteriorating over time.

Figure 1: U.Michigan Economic Sentiment (blue), Conference Board Confidence Index (brown), Gallup Confidence (green), all demeaned and divided by standard deviation 2021M01-2025m02. Red dashed line at “Liberation Day” Source: UMichigan, Gallup, Conference Board, and author’s calculations.

It’s interesting to see the components  of sentiment:

Figure 2: U.Michigan Economic Sentiment (bold black), expectations (brown), current conditions (green). November observation is prelimanryRed dashed line at “Liberation Day” Source: UMichigan.

Sentiment is as low as in the immediate post-“Liberation Day” period, while the current situation assessment is even worse. If one were to take EJ Antoni’s definition of recession as “how American’s feel”, one might very well think we were in a recession (not that I would suggest that one should use that definition).