The University of Michigan Survey of Consumers sentiment index for May posted an initial reading of 67.4 for the month, down from 77.2 in April and well off the Dow Jones consensus call for 76. The move represented a one-month decline of 12.7%. The one-year inflation outlook jumped to 3.5%, up 0.3 percentage point from a month ago to the highest level since November 2023.

Consumer sentiment slumped as inflation expectations rose, despite otherwise strong signals in the economy, according to a closely watched survey released Friday.

The University of Michigan Survey of Consumers sentiment index for May posted an initial reading of 67.4 for the month, down from 77.2 in April and well off the Dow Jones consensus call for 76. The move represented a one-month decline of 12.7% but a year-over-year gain of 14.2%.

Along with the downbeat sentiment measure, the outlook for inflation across the one- and five-year horizons increased.

The one-year outlook jumped to 3.5%, up 0.3 percentage point from a month ago to the highest level since November.

Also, the five-year outlook rose to 3.1%, an increase of just 0.1 percentage point but reversing a trend of lower readings in the past few months, also to the highest since November.

“While consumers had been reserving judgment for the past few months, they now perceive negative developments on a number of dimensions,” said Joanne Hsu, the survey’s director. “They expressed worries that inflation, unemployment and interest rates may all be moving in an unfavorable direction in the year ahead.”

Other indexes in the survey also posted substantial declines: The current conditions index fell to 68.8, down more than 10 points, while the expectations measure fell to 66.5, down 9.5 points. Both pointed to monthly drops of more than 12%, though they were higher from a year ago.

The report comes despite the stock market riding a strong rally and gasoline prices nudging lower, though still at elevated levels. Most labor market signals remain solid, though jobless claims last week hit their highest level since late August.

“All things considered, however, the magnitude of the slump in confidence is pretty big and it isn’t satisfactorily explained by” geopolitical factors or the mid-April stock market sell-off, wrote Paul Ashworth, chief North America economist at Capital Economics. “That leaves us wondering

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Economists at Swiss Bank UBS were among those who shifted their view on when the BOE may cut interest rates, saying they were now expecting the first rate cut to take place in June rather than August. The BOE’s interest rate decision was followed Friday by the latest U.K. gross domestic product data, which showed that the U.K. economy grew by more than expected in the first quarter of 2024. GDP increased by 0.6% compared to the 0.4% estimate, marking the first quarter since the end of 2021 in with GDP growth exceeded 0.5%. Bank of England Governor Andrew Bailey attends the central bank’s Monetary Policy Report press conference at the Bank of England, in London, on May 9, 2024. The Bank of England on Thursday kept its main interest rate at a 16-year high, but hinted at a cut over the summer as UK inflation cools further and the country looks set to exit recession. (Photo by Yui Mok / POOL / AFP) (Photo by YUI MOK/POOL/AFP via Getty Images) Yui Mok | Afp | Getty Images

LONDON — A slew of commentary from the Bank of England and a better-than-expected economic growth number have left traders and investors scrambling to refine their bets on when the U.K. central bank will start to cut its benchmark rate.

Investors had been eagerly awaiting any indicators in the hope that they would provide hints about when cuts may begin. The BOE’s benchmark rate helps price all sorts of loans and mortgages in the country and has risen rapidly over recent years to help tame high inflation.

Markets on Friday were pricing in an around 48% chance of a rate cut in June according to LSEG data, slightly higher than Thursday’s 45% probability.

Economists at Swiss Bank UBS were among those who shifted their view on when the BOE may cut interest rates, saying they were now expecting the first rate cut to take place in June rather than August.

“The broader message and the tone of the MPC were more dovish than we had anticipated,” they said in a note published following the BOE’s latest interest rate decision.

The central bank on Thursday said it would leave interest rates unchanged for now, and stressed that a June rate cut was in no way guaranteed. Two members of

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Commuters in London. Jason Alden/Bloomberg via Getty Images

The U.K. economy has emerged from recession as gross domestic product rose 0.6% in the first quarter, official figures showed Friday, beating expectations.

Economists polled by Reuters had forecast growth of 0.4% on the previous three months of the year.

The U.K. entered a shallow recession in the second half of 2023, as persistent inflation continued to hurt the economy.

Although there is no official definition of a recession, two straight quarters of negative growth is widely considered a technical recession.

The U.K.’s production sector expanded by 0.8% in the period from January to March, while construction fell by 0.9%. On a monthly basis, the economy grew by 0.4% in March, following 0.2% expansion in February.

In output terms, the services sector — crucial to the U.K. economy — grew for the first time since the first quarter in 2023, the Office for National Statistics said. The 0.7% growth was mainly driven by the transport services industry which saw its highest quarterly growth rate since 2020.

U.K. Prime Minister Rishi Sunak, whose Conservative Party recently suffered significant losses at local elections, welcomed the news. “The economy has turned a corner,” he said in a post on social media platform X.

“We know things are still tough for many people, but the plan is working, and we must stick to it,” Sunak added.

Suren Thiru, economics director at ICAEW, a professional group for chartered accountants, struck a more measured tone. He said the positive impact of weaker inflation could be curtailed by a renewed caution to spend amid political uncertainty ahead of general elections expected later this year.

“The UK’s escape from recession is a rather hollow victory because the big picture remains one of an economy struggling with stagnation, as poor productivity and high economic inactivity limits our growth potential,” said Thiru.

The Bank of England’s Monetary Policy Committee on Thursday warned that indicators of persistent inflation “remain elevated,” and voted to keep its main interest rate at 5.25%.

The central bank forecast headline inflation close to 2% in the near-term, but said it expects an increase slightly later in the year as the effects of a sharp fall in energy prices wear off.

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After years of China being Germany’s main trading partner, the U.S. looks like it’s quietly taking that top spot as the year progresses. Combined exports and imports between Germany and the U.S. totaled 63 billion euros ($68 billion) between January and March on 2024, while trade with China came to just below 60 billion euros. German has adapted its China strategy, urging companies to “de-risk” from the country last year. The flags of the U.S. and Germany are on the table at a bilateral meeting between German Economics Minister Habeck and U.S. Secretary of State Blinken at a hotel on the Gendarmenmarkt. Photo: Christoph Soeder/dpa (Photo by Christoph Soeder/picture alliance via Getty Images) Christoph Soeder/dpa | Picture Alliance | Getty Images

After years of China being Germany’s main trading partner, the U.S. looks like it’s quietly taking that top spot as the year progresses.

Combined exports and imports between Germany and the U.S. totaled 63 billion euros ($68 billion) between January and March on 2024. Meanwhile, trade between Germany and China came to just below 60 billion euros, according to CNBC calculations. Reuters first reported the change on Thursday.

Several factors played a role in the change, Carsten Brzeski, global head of macro research at ING Research, told CNBC.

“This shift is the result of several factors: strong growth in the U.S. has boosted demand for German products. […] At the same time, decoupling from China, weaker domestic demand in China and China being able to produce goods it previously imported from Germany (mainly cars) reduced German exports to China,” he said.

China has been Germany’s biggest trading partner for years, but the gap between China and the U.S. narrowed in recent years. The U.S. has also long been a bigger market for German exports than China, Holger Schmieding, chief economist at Berenberg Bank, told CNBC.

While the U.S. share of German exports had been growing in recent years, China’s has been decreasing, he noted. “The Chinese economy is stuttering and German companies are facing stiffer competition from subsidised Chinese firms,” Schmieding said.

The key difference is that now the U.S. is also becoming more important when it comes to imports, he pointed out.

Germany has been pursuing a new China strategy, urging companies

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Jobless claims totaled a seasonally adjusted 231,000 for the week ending on May 4, up 22,000 from the week before, the highest since late August 2023. Continuing claims, which run a week behind, increased to 1.78 million, up 17,000 from the previous week. Jobseekers during a Construction Career Fair at Cape Fear Community College in Wilmington, North Carolina, US, Wednesday, March 15, 2023.  Allison Joyce | Bloomberg | Getty Images

Initial filings for unemployment benefits hit their highest level since late August 2023 in a potential sign that an otherwise robust labor market is changing.

Jobless claims totaled a seasonally adjusted 231,000 for the week ended May 4, up 22,000 from the previous period and higher than the Dow Jones estimate for 214,000, the Labor Department reported Thursday. It was the highest claims number since Aug. 26, 2023.

The increase in claims follows a string of mostly strong hiring reports, though hiring in April was light compared to expectations. Also, job openings have been declining amid expectations that the labor market is likely to slow through the year.

Along with the move higher in layoffs, the report showed that continuing claims, which run a week behind, increased to 1.78 million, up 17,000 from the previous week. The four-week moving average of claims, which helps smooth out weekly volatility in numbers, increased to 215,000, up 4,750 from the previous week.

“Weekly jobless claims are one of the timeliest indicators of when the economy is starting to undergo serious deterioration, and the magnitude of new layoffs this week looks worrisome,” wrote Christopher Rupkey, chief economist at FWDBONDS. “One week does not a trend make, but we can no longer be sure that calm seas lie ahead for the US economy if today’s weekly jobless claims are any indication.”

Nonfarm payrolls increased by 175,000 in April, below the Wall Street estimate of 240,000 and the smallest gain since October 2023. However, the unemployment rate was at 3.9%, continuing a string since February 2022 of holding below 4%.

Markets reacted little to the jobless claims release, with stock market futures slightly negative and Treasury yields mixed.

Excluding seasonal adjustments, claims totaled 209,324, up 10.4% from the previous week. New York alone saw an increase of more than 10,000, accounting for more than half the total rise.

“A low number of

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Billionaire investor Stanley Druckenmiller on Tuesday blasted fiscal and monetary authorities, including Treasury Secretary Janet Yellen and Fed Chair Jerome Powell, for causing high inflation. “Bidenomics, If I was a professor, I’d give him an ‘F,'” Druckenmiller said. Druckenmiller also called himself a “man without a candidate” as he feels a Donald Trump presidency would fuel inflation. “To some extent, I feel like they fumbled on the five yard line,” he said of the Fed.

Reckless government spending enabled by the Federal Reserve is hurting average Americans and endangering President Joe Biden’s chances at getting reelected, billionaire investor Stanley Druckenmiller said Tuesday.

During an appearance on CNBC’s “Squawk Box,” the head of Duquesne Family Office who made his name betting against the British pound in the early 1990s blasted fiscal and monetary authorities, including Treasury Secretary Janet Yellen and Fed Chair Jerome Powell.

In addition, he called “Bidenomics” a failure and said consumers are paying the price in terms of higher inflation.

“There does seem to be a lot more recognition … of the fiscal situation facing us. Everybody seems to get it but Yellen, who just keeps spending and spending,” Druckenmiller said. “I think it’s dumb politically because it’s causing inflation and it doesn’t take a genius to figure out that the average American is getting hurt by the inflation.”

Druckenmiller’s comments come with the Fed still trying to bring inflation down, as policymakers have dashed investors’ hopes for aggressive interest rate cuts this year.

Getting markets enthused about rate reductions was a mistake because it set financial conditions “on fire,” he said.

“It seemed to me the Fed was in a perfect position. Inflation was coming down, financial conditions were tightening,” he said. “To some extent, I feel like they fumbled on the five-yard line.”

The Fed’s mistake

Though Druckenmiller said his firm was “a major beneficiary” of the jump in asset prices and easing conditions, he still thinks the Fed’s pivot in late 2023 to push harder on the idea that rate cuts were coming was a mistake. The Fed at that point only upped its unofficial forecast from two to three cuts. However, investors interpreted comments from Powell in December to mean that a substantial policy easing was ahead.

Elected officials generally welcome low interest rates.

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The share of renters who believe that they one day will be able to afford a home, fell to a record low 13.4%, according to a New York Federal Reserve survey released Monday. There’s not a lot of good news on the renting front, either. Respondents expect rental costs to increase by 9.7% over the next year. A sign advertising a home for sale is displayed outside of a Manhattan building on April 11, 2024 in New York City.  Spencer Platt | Getty Images

The dream of home ownership has gotten even further away for renters, with higher housing costs and elevated interest rates standing in the way of the American housing dream, according to a New York Federal Reserve survey released Monday.

The share of renters as of February who possess hopes of “residential mobility,” or the belief from renters that they one day will be able to afford a home, fell to a record low 13.4% in the central bank’s annual housing survey for 2024.

That’s down from 15% in 2023 and well off the 20.8% series high back in 2014.

Pessimism about future prospects comes amid a confluence of factors conspiring against the likelihood of renters being able to transition to home ownership.

For one, some 74.2% of renters viewed obtaining a mortgage as somewhat or very difficult, which the New York Fed said has “deteriorated substantially” from the 66.5% level in 2023 and 63.1% in 2022.

Moreover, mortgage rates have remained high by historical standards. A 30-year fixed-rate mortgage now carries an average 7.22% borrowing rate, the highest since late-November 2023, according to Freddie Mac.

Housing affordability has improved little, with the median price in February at $388,700, the highest since November, according to the National Association of Realtors. The NAR’s housing affordability index was at 103 in February, down slightly from January but still at elevated levels with average monthly housing payments at $2,040.

Survey respondents expect housing prices to increase 5.1% over the next year, nearly double the 2.6% expected rate in February 2023 and above the pre-pandemic mean of 4.2%.

Despite prospects for the Fed to cut interest rates before the end of 2024, respondents think mortgage rates are only going to go higher. The outlook for a year from now is that borrowing costs will be 8.7%, and

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