“The Sentiment Index now signals the onset of a sustained downturn in consumer spending,” Richard Curtin, chief economist of the University of Michigan’s Surveys of Consumers, wrote in a commentary released with the index Friday. Consumer spending is a major driver of the economy, so less of it can hurt the prospects for growth. There are reasons to be skeptical, however, about just how much of today’s pessimism will translate into people hoarding their pennies instead of spending them, since the pandemic-era economy is anything but normal. For one thing, all the extra money people socked away over the last few years might be burning holes in their pockets, Curtin said. Interestingly, all of February’s decline came from households with incomes of $100,000 or more. In addition to inflation fears, people thought their wealth would be affected by a lack of future stock market gains, Curtin said. Have a question, comment, or story to share? You can reach Diccon at dhyatt@thebalance.com.
