5 year ahead inflation at 3.5%, highest since 1995M04. From Michigan Survey of Consumers:<\/p>\n
Figure 1:<\/strong> Michigan Survey Consumer Expectations (bold black), Democratic (light blue), Independent (chartreuse) and Republican (red). Source: Michigan Survey.<\/em><\/p>\n The overall month-on-month drop in Expectations is about 1.2 standard deviations (1986-2025, exc. Covid months). The two month drop is 1.4 standard deviations. Interestingly, Democrats\/Lean Democratic mirror Independents, while Republicans\/lean Republican move on their own trajectory.<\/p>\n Here\u2019s the corresponding picture for current conditions. Interestingly, the month-on-month drop here is almost 2 standard deviations (ex-Covid months).<\/p>\n Figure 2:<\/strong> Michigan Survey Consumer Current Conditions (bold black), Democratic (light blue), Independent (chartreuse) and Republican (red). Source: Michigan Survey.<\/em><\/p>\n How representative is the Michigan survey for overall sentiment? Here is the Michigan Sentiment survey compared to the Conference Board\u2019s Confidence index (up to January), and Gallup\u2019s Confidence measure.<\/p>\n Figure 3:<\/strong> Michigan Economic Sentiment (blue, left scale), Conference Board Confidence (brown, left scale), Gallup Confidence (green, right scale). Source: Michigan Survey of Consumers, Conference Board, Gallup.\u00a0<\/em><\/p>\n Finally, the preliminary reading on inflation expectations has held up.<\/p>\n![\"\"](\"https:\/\/econbrowser.com\/wp-content\/uploads\/2025\/02\/expectpix1.png\")
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