University Of Michigan Sentiment Collapses, Second Lowest On Record

University of Michigan Consumer Sentiment came in at 50.3, the second lowest reading in history. This was far below forecasts of 53.0. The drop in consumer sentiment likely has to do with the weakening labor market, the government shutdown and inflation.

The economy has split in two, anyone with large stock market investments is able to spend money, ignoring the slowing economy and inflation. On the other hand, a majority of Americans are feeling the pinch of inflation and the slower economy, with little to no stock market exposure. This is seen by recent earnings from McDonalds (MCD), Chipotle (CMG), DoorDash (DASH) and e.l.f Beauty (ELF). All these companies are saying the consumer is pulling back substantially.

The biggest risk is that inflation persists, the economy continues to slow and the stock market begins to go down. That is a recipe for a deep recession.