This morning, consumer sentiment was full of interesting surprises.

The number came in better-than-expected, but the composition was something we’ve rarely seen.

Unlike most economic surveys that have seen current conditions edge higher, and expectations soar, this was the opposite.

Current conditions increased 21.6% while expectations stumbled almost seven percent.

The reason for tepid expectations was the parabolic spike with concerns that prices of major purchases will rise.

This influenced year-ahead inflation expectations, which rose to 2.9% from 2.6% last month.

I would add this caveat:

• Party affiliation is moving in opposite directions.
• Republican one-year inflation expectation plunging to 1.3%
• Democrat one-year inflation expectation spiking to 3.2%

An interesting piece in Bloomberg this week points to tariff inflation being transitory. If that’s the case, there is too much handwringing going on.