Just 16% of US consumers expect their income gains to outrun inflation over the next year.

That’s according to the final read on University of Michigan sentiment for May. 80% of Americans said it was a bad time to buy a house, blaming both high rates and high prices.

The headline sentiment index moved up from the preliminary print, but at 59.2, was nevertheless indicative of economic angst.

The expectations gauge was likewise revised a bit higher from this month’s early read, but at 55.4, it was down sharply from April.

Survey director Joanne Hsu blamed economic uncertainty and partisan rancor inside the Beltway. “This decline mirrors the 2011 debt ceiling crisis, during which sentiment also plunged,” she said Friday.

Notably, the biggest deterioration in sentiment was among the middle class. “Consumers are concerned that any recession to come may cause lasting pain,” Hsu went on, even as she noted that income expectations are “stable,” which is “supporting consumer spending for the time being.” Data released early Friday showed consumer spending in April was indeed robust, both in nominal and real terms, while accompanying personal income figures were weak.

The five-year inflation outlook in the Michigan survey was revised a tick lower, but at 3.1%, was still consistent with the highest readings of the pandemic era. When taken in conjunction with ongoing evidence of stubborn core price growth, the situation conjures memories of last summer, when disconcerting inflation data conspired with hot readings on the Michigan poll’s longer-term inflation series to usher in what would ultimately be a series of three-quarter point Fed hikes.

Some observers nodded Friday to a drop on the survey’s year-ahead inflation series to 4.2% from 4.6% last month, but the Fed is concerned about longer run expectations. Policymakers don’t put a lot of emphasis on the short-term measure. That said, inflation uncertainty, as measured by the interquartile range, dropped to the lowest in nearly two years. That’s meaningful.

I want to return briefly to the perceptions of buying conditions for homes. The figure below shows why consumers harbor such a grim view of the housing market.

The post-pandemic conjuncture is unprecedented for the extent to which both sides of the affordability math (i.e., prices and financing conditions) are viewed as acutely onerous.

And yet, housing industry aficionados generally argue that the worst of the housing “recession” is behind the country.