US Consumer Sentiment Hits 26 Year Low

Consumer Sentiment plunged to levels not seen since 1982 according to the latest to the latest Michigan survey. If that translates into a 1982 like recession, things could get really ugly. From marketwatch.com:

Consumer sentiment plunges to 26-year-low

Consumer sentiment sunk to its lowest level in 26 years in early April, according to a report on Friday from University of Michigan/Reuters, as worries about the economy, unemployment and inflation deflated hopes for future.

U.S. consumer sentiment index fell to 63.2 in early April from 69.5 in March. Sentiment is at its lowest level since March 1982. Economists surveyed by MarketWatch were looking for an April result of 68.8.

The expectations index fell to 53.4 in April -- the lowest since November 1990 -- from 60.1 in March, noted Ian Shepherdson, chief U.S. economist at High Frequency Economics. There's no sign that confidence bottomed out yet, he said.

"If sustained at this level, the index is consistent with a 0.5% year-over-year rate of outright decline in real consumption," Shepherdson wrote. "Bearing in mind that more than half of all consumption is non-discretionary (food, energy, housing, etc) this means discretionary spending will fall at a 1% rate or more, something we haven't seen since 1991."

Consumers have been more cautious about spending, according to recent confidence readings. Last month, after reporting a drop in consumer sentiment, Richard Curtin, the director of the survey, said a recession has occurred whenever the index has declined as much as it has fallen during the past year.

The current conditions index fell to 78.4 in April from 84.2 in March. The one-year inflation expectation rose to 4.8% from 4.3%.

"One-year inflation expectations have moved above the post-Katrina spike to the highest levels seen since 1982," wrote John Ryding, U.S. chief economist for Bear Stearns.

Elsewhere Friday, the Labor Department reported that a surge in prices for imported petroleum pushed prices of goods imported into the U.S. higher by 2.8% in March, the most since November 2007.