Latest / Markets with Megan: A Quick Financial Markets Update / 44-Year Low Levels? Inflation Fears Surge | S2 E044 | 05-16-25

Transcript

44-Year Low Levels? Inflation Fears Surge | S2 E044 | 05-16-25 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan Horneman: Just when we thought consumer confidence couldn't get worse, it gets worse.
• 0:03
  Megan Horneman: It is Friday, may the 16th, and this is Markets with Megan.
• 0:07
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• 0:09
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• 0:12
  Megan Horneman: But we're here today because we want to discuss some of the economic data we got this morning, specifically on the preliminary reading for the month of May on University of Michigan Consumer Confidence.
• 0:23
  Megan Horneman: And when you look at this, this got this just continues to get weaker.
• 0:28
  Megan Horneman: On the headline it came in weaker than expected.
• 0:32
  Megan Horneman: But let's break down the different components of it the expectations component so this is what those consumers believe for the expectations of the economy, and this came to the lowest level of reading, the lowest level since 1980.
• 0:49
  Megan Horneman: When you look at the confidence on the current economic conditions, that's the lowest we've seen since June of 2022.
• 0:58
  Megan Horneman: But what's really going to get the Fed's notice is those inflation expectations.
• 1:02
  Megan Horneman: So this index looks at two different indicators for inflation consumers' expectations over the next one year and then also over the next five to 10 years.
• 1:13
  Megan Horneman: That five to 10-year component tends to be pretty stable.
• 1:17
  Megan Horneman: But what we're looking is it came at 4.6% versus an expectation of 4.4.
• 1:24
  Megan Horneman: And that's the highest we've seen since 1991.
• 1:27
  Megan Horneman: When you look at the one-year inflation expectations, this came in at 7.3%.
• 1:34
  Megan Horneman: The expectation was for 6.5.
• 1:36
  Megan Horneman: That's the highest we've seen since 1981.
• 1:40
  Megan Horneman: So consumers are very concerned about the economy and they're very concerned about inflation.
• 1:44
  Megan Horneman: When you have consumers concerned about the economy and they're very concerned about inflation, when you have consumers concerned about inflation, this becomes a problem because if they spend more money now and the anticipation prices will be higher in the future, then you start to see this vicious cycle of inflation and that's what the Fed's going to pay attention to.
• 2:03
  Megan Horneman: So it is a Friday.
• 2:04
  Megan Horneman: Markets are thinly traded.
• 2:05
  Megan Horneman: Today we're seeing the bond markets.
• 2:07
  Megan Horneman: Yields are lower, with the expectation the Fed may be able to cut.
• 2:11
  Megan Horneman: But I think this report gives the Fed a very difficult position.
• 2:14
  Megan Horneman: The consumers are very concerned about the economy, but they're also concerned about inflation.
• 2:19
  Megan Horneman: That's all we have today.
• 2:21
  Megan Horneman: If you want to see a history of our podcast, please go to marketswithmeganfm.
• 2:25
  Megan Horneman: Thank you.