Declining U.S. consumer sentiment to hurt Democrats in midterms

WASHINGTON, May 31 (Xinhua) -- The U.S. consumer sentiment fell 10 percent in May from the previous month, underscoring negative views of the U.S. economy. That's sure to hurt Democrats in November's midterm elections, experts said.

The Consumer Sentiment Index released Friday by the University of Michigan (UM) Surveys of Consumers fell to 58.4 in the May 2022 survey, down from 65.2 in April and below last May's 82.9.

The index not only fell 10.4 percent compared with April, but also marked a nearly 30 percent drop year on year.

"This recent drop was largely driven by continued negative views on current buying conditions for houses and durables, as well as consumers' future outlook for the economy, primarily due to concerns over inflation," Director of the Surveys of Consumers Joanne Hsu said in a statement.

Consumers are feeling the sting of high food and gas prices, and they are blaming Democrats -- the party that controls the White House and both chambers of Congress.

The Labor Department recently reported that the U.S. consumer inflation in April surged by 8.3 percent from a year ago, marking the second straight month of inflation over 8 percent.

Meanwhile, Monday's national average price for a gallon of regular gasoline also hit a fresh record high of 4.619 U.S. dollars, according to the American Automobile Association.

Some believe that inflation could even have more dire consequences than the U.S. Federal Reserve wants Americans to believe.

"Contrary to what the Federal Reserve would want us to believe, the only way that inflation is likely to come down from today's 40-year high ... is if the economy goes into recession," Desmond Lachman, senior fellow at the American Enterprise Institute and a former official at the International Monetary Fund, told Xinhua.

As a result of the Fed's shift to a more hawkish monetary policy stance, the economy will go into recession, not least because the Fed's higher interest rates and balance sheet reduction will burst the equity and housing market bubble, Lachman said.

The expert estimated that If a recession does occur, the United States must expect a sharp deceleration in inflation by early next year. This would be especially the case if the economic slowing -- now in evidence in the rest of the world economy -- were to cause a sizable decline in international oil prices, Lachman said.

"Inflation is a big problem for Democrats," Brookings Institution senior fellow Darrell West told Xinhua.

"Voters are seeing rising costs for food, gas, and rent and blaming Biden for these difficulties," he said. "It is one of the reasons Democrats are not expected to do well this fall."

Ford O'Connell, adjunct professor at the Graduate School of Political Management of George Washington University, told Xinhua that inflation "is going to lead to an electoral tsunami in the 2022 midterms."

"It's going to be pretty much everywhere, because inflation is a tax that all Americans pay," O'Connell noted.

Clay Ramsay, a researcher at the Center for International and Security Studies at the University of Maryland, found that the public is more concerned about inflation than it's been since 1984.

The public concern is not fueled by inflation alone, but by the recent unpredictable and confusing trends, Ramsay said.

Inflation has also been a primary driver of the recent U.S. stock market decline, because the Fed must raise interest rates to rein in soaring prices. Investor jitters on supply chain bottlenecks, as well as the conflict in Ukraine, also played a role in the market downtick.

The Dow Jones Industrial Average, Nasdaq and S&P 500 have all taken a nosedive, although the past several days have seen a limited climb back upward.

Besides, around 60 million people actively participated in 401(k) plans -- the main market-based retirement plan in the United States -- as of September 30, 2021, according to the Investment Company Institute. Many saw their 401(k) plans lose a large chunk of value in recent weeks, which many voters are not happy about.