Well, I don’t relish the idea of a return to the 80’s…let’s take it back a bit further, to at least the horse and buggy days.

Via FT.com

US consumer confidence sank to its lowest level in 28 years this month as anxious shoppers grappled with surging food and fuel costs, according to a new survey published on Friday.

The Reuters/University of Michigan consumer confidence index plunged from 62.6 to 59.5 in May, the lowest reading since June 1980. Meanwhile, one-year inflation expectations rose to 5.2 per cent, the most since February 1982, and up from 4.8 per cent in April.

A separate report revealed new construction of single-family homes dropped to the lowest level in 17 years. Although the headline rate of housing starts increased, economists attributed the improvement to a big spike in a volatile gauge of multi-family home construction.

Waning consumer confidence and the sliding US housing market have compelled the Federal Reserve to slash interest rates by 325 basis points since last September to try to prevent the US economy tipping into a deep recession.

Policymakers fear that US consumers will rein in spending as the labour market weakens and credit conditions tighten, causing the economy to slow more quickly.

“There is not so much as a sniff of a hint of recovery here; the data continue to deteriorate,” said Ian Shepherdson, chief US economist at High Frequency Economics.

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