The Fed's worst inflation fears may be coming true as consumers lose faith in long-term prices—even Trump supporters doubt he can bring relief

(Credit: Mario Tama/Getty Images)

On the same day that Kevin Warsh was sworn in as the new Federal Reserve chairman, the University of Michigan’s consumer sentiment survey delivered a worrisome reading on inflation expectations and a major red flag for the central bank.

In addition to the overall index falling for the third straight month to a fresh record low—even undercutting the levels seen during the 1970s oil crisis—inflation expectations rose as the Iran war and the continued closure of the Strait of Hormuz keep energy prices high.