The University of Michigan US consumer sentiment index fell sharply to a record low of 50.2 in June, well below market forecasts of 58, preliminary figures showed. Inflation was credited as the biggest reason for the decline.
The consumer sentiment index for the US was revised down to 58.4 in May, the lowest since August 2011 when it was 55.8, from a preliminary reading of 59.1.
CURRENT ECONOMIC CONDITIONS
Consumers continued to have negative views on current buying conditions for houses and durables, as well as the future outlook for the economy, primarily because of concerns over inflation, the report said.
The current economic conditions sub-index sank to an all-time low of 55.4 (vs 63.3 in May), and the expectations gauge plunged to 46.8, the lowest since May of 1980, the report said. Consumers’ assessments of their personal financial situation worsened about 20%.
Forty-six percent of consumers attributed their negative views to inflation, the biggest share since 1981, during the Great Recession, the University said. Inflation expectations for the year ahead went up to 5.4% from 5.3% and the 5-year outlook to 3.3%, the highest since June of 2008. Consumers expected gas prices to continue rising a median of 25 cents over the next year, more than double the May reading.
Meanwhile, inflation expectations for the year ahead dropped to 5.3% from 5.4% but the 5-year outlook was unchanged at 3%.
CONFIDENCE LOWER THAN IN MEXICO
Consumer confidence also was lower than in Mexico, data from the Organization for Economic Cooperation and Development showed. The reading for the US was 97.1, up from May’s record low of 96.1, but well below May’s Mexico reading of 103.0.
The OECD web page said Russia’s invasion of Ukraine slowed the recovery from the COVID 19 pandemic and set the global economy on a course of slower growth and rising inflation.
The OECD’s latest economic outlook projected global growth to decelerate sharply to around 3% this year and 2.9% in 2023, well below the recovery projected in December’s economic outlook, the OECD said.
But while the economic effect of the Ukraine war is felt in the US, the economic and social effects were strongest in Europe, the OECD said. Many of the countries hardest hit were in Europe because of exposure through energy imports and refuge flows.
High inflation was eroding household income and spending, hitting vulnerable households particularly hard, the OECD said. The risk of a serious food crisis remains acute for the world’s poorest economies because of the high risk of supply shortages and elevated costs.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $135.00 to $143.15 per cwt, compared with last week’s range of $134.15 to $142.43. FOB dressed steers, and heifers went for $216.47 to $217.22 per cwt, versus $212.70 to $218.64.
The USDA choice cutout Monday was down $0.78 per cwt at $270.54, while select was down $1.44 at $247.45. The choice/select spread widened to $23.09 from $22.43 with 81 loads of fabricated product and 12 loads of trimmings and grinds sold into the spot market.
The USDA reported that basis bids for corn from feeders in the Southern Plains were up $0.15 at $1.90 to $2.00 a bushel over the Jul futures and for southwest Kansas were steady at even the Jul, which settled at $7.69 1/4 a bushel, down $0.04.
No live cattle delivery intentions were posted Monday.
The CME Feeder Cattle Index for the seven days ended Friday was $160.29 per cwt down $1.58. This compares with Monday’s Aug contract settlement of $171.32, down $3.15.