Joe Biden sounded frustrated in his CNN interview this week on the economy. He keeps touting how well things are going and can’t fathom why people aren’t joining the Bidenomics celebration. The answer is that Americans aren’t as stupid as he thinks they are: they know they are poorer than under Trump and the economy is in big trouble.

That’s the takeaway from the just-released consumer confidence numbers. The University of Michigan’s preliminary read for May plunged by 12.7% in the biggest point drop since August 2021. The reading missed expectations by the largest spread on record, more than twice the previous largest miss. Both current conditions and future expectations plummeted as inflation expectations climbed, with short-term hitting 3.5% and long-term 3.1%. Those are both the highest readings since November 2023.

Previously, Fed Chair Powell was quick to cite the decline in inflation expectations as a reason to stop hiking rates and to soon cut rates. Now that inflation expectations are rising, we think the case for cutting rates is even weaker.