Gloomy Consumers

The Conference Board has added another piece of data confirming that consumers are a gloomy bunch regarding the economy.

As MarketWatch.com reported: “U.S. consumer confidence extended its tumble in May to reach a 16-year-low, the Conference Board reported Tuesday, as inflation expectations reached a record high on rising gas prices.”

Keep in mind that policymakers – that is, our elected officials and their appointees – have played central roles in our current economic doldrums. For example, regarding the impact of gas prices, government moratoriums on energy exploration and development under federal lands and offshore are real negatives in terms of supply and costs.

Also, Federal Reserve monetary policy has failed to keep inflation and inflation expectations under control. That means higher oil prices, due to both a falling value of the dollar jacking up the dollar price of oil, and the fact that oil serves as a hedge against inflation.

These inflation problems also create uncertainty that restrains private sector investment.

All of this adds up to slow economic growth – perhaps a recession – with added inflation risks. Hence, gloomy consumers.