A new survey from the University of Michigan shows consumers souring sharply on the economic outlook as the trade war heats up.

By Howard Schneider WASHINGTON (Reuters) -Soaring consumer inflation expectations, driven to a level not seen since the early 1980s, coupled with jittery markets and rising U.S. Treasury yields on Friday amplified the Federal Reserve's dilemma in determining whether the economy is facing a new price shock or headed for a downturn.

Federal Reserve Bank of Kansas City President Jeff Schmid said he would prioritize reining in inflation if US central bankers are forced to balance their price stability goal against their mandate for full employment.