US consumer confidence drops to 10-year low amid inflation fears – News Couple

US consumer confidence drops to 10-year low amid inflation fears

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US consumer sentiment collapsed unexpectedly in early November as Americans grew increasingly concerned about rising prices and the inflationary impact on their finances.

Data released on Friday showed that the University of Michigan’s preliminary sentiment index fell to 66.8 from 71.7 in October. The November number followed all expectations in a Bloomberg survey of economists that called for an increase to 72.5.

Richard Curtin, director of the survey, said in a statement that the decline in confidence reflects “a rising inflation rate and a growing belief among consumers that effective policies have not yet been developed to limit the damage caused by rising inflation.”

The report showed that consumers expect inflation to rise by 4.9% over the next year, the highest level since 2008. They expect prices to rise by 2.9% over the next five to ten years, unchanged from the previous month.

“One in four consumers reported inflationary cuts to their living standards in November, with lower incomes and older consumers expressing the greatest impact,” Curtin said.

Rising food, gas and housing costs are eroding consumers’ purchasing power despite strong wage growth. About half of all families expect a decline in inflation-adjusted incomes next year, according to the data. The sentiment figures come on the heels of government data earlier in the week which showed the highest annual inflation rate in three decades.

As consumers grow increasingly dazed about the impact of inflation on purchasing conditions, household spending showed signs of improvement at the end of the weak third quarter.

“Looking ahead, the risk is huge, and continued price increases are fueling the consumer inflation psychology,” Elisa Winger, an economist at Bloomberg, said in a note. “In the near term, shortages and prices should limit inflation-adjusted spending.”

political influence

President Joe Biden said in a statement earlier this week that tackling rising inflation is his “top priority” as he faces low acceptance rates. Michigan’s numbers showed a deep split along partisan lines. Sentiment among Republicans fell by 17 points to an all-time low, while sentiment among Democrats fell by 5.3 points.

The Michigan report showed a sharp deterioration in conditions for buying household goods, with the gauge dropping to a reading of 78 which was the second lowest reading in data going back to 1978. Role.

Twenty-four percent of households expect to be worse off next year, the highest percentage since June 2008, according to Curtin.

The measure of current conditions fell to 73.2, the lowest level since 2011. The measure of future expectations fell to 62.8, the weakest since 2013, according to the survey.

Americans are also more pessimistic about the outlook for the economy over the next five years. The university’s scale has fallen to its lowest level since 2011.

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