Measuring Price Anxiety and Consumer Sentiment

Added: 2026-05-23

[00:00:00]We are not using a psychological measure of excess prices and that is different from a survey measure. We are using a you know an actual mechanical level of excess prices from residual from the trend. So you know one one way to reconcile the fact that the um objective measure of excess prices rather than the survey base measure of excess prices is more explanatory. You could say people are bad at predicting prices in the future just in general which which would be true.

[00:00:29]Um or that you know the survey isn't picking up on anxiety about the price level with that variable as as well as you would expect and one one thing to mention here is that the University of Michigan's measure of price what I what I've called price anxiety which is just the percent of people who have a bad opinion of the economy. So take those people the percent of that people who attribute it to worse financial worse personal finances is at an all-time high and it surged in 2021 2022 and stayed there never came back down which is similar you'll notice to the trend on on consumer sentiment in the University of Michigan. I don't have the conference board data in front of me or memorized.

[00:01:16]So yeah it it is possible that just people are like bad at predicting what prices should be.

[00:01:23]You know one idea would be if we if we took the expected change in prices over the next year and like divided it by average CPI overall inflation over the 10-year period preceding. I wonder if that number would be at an all-time high.

[00:01:38]That's a very easy check after the fact.

[00:01:40]I bet it would be near an all-time high.