We already know it wasn't pretty, but the picture from yesterday's University of Michigan consumer sentiment survey is still pretty shocking. Here's how the inflation expectations cookie crumbled:
You, of course, have already noticed that there is a similar dramatic spike in the not too distant past (in the opposite direction). And you have probably guessed that the date is associated with September 11, 2001.
I'm not sure I needed two data points to know that disasters tend to make people pessimistic, but if I did, I have them now. Here's hoping these expectations settle down as quickly as they did the last time.
UPDATE: Several eagle-eyed readers noted that the expectations data in the picture above does not quite match the numbers reported in the press and in my previous post on the subject. Good catch. The explanation is pretty simple: The picture above is based on the average response in the survey, while most other reports were based on the median response. To be perfectly honest, the median is often the better thing to look at, as it controls for outliers. It is also the one that corresponds to what we generally refer to as the "consensus." Thanks to the quick-on-the-draw Linsey Malloy, here is the analogous picture for median expectations:
FINAL UPDATE: For the permanent record, here are the final results:
