U.Michigan consumer confidence index points to emerginng wage-price spiral
American consumers' confidence was little changed at the start of December, but there were signs of a potential wage-price spiral taking form, the results of a closely-followed survey revealed.
A preliminary reading on the University of Michigan's consumer confidence index for the month of December printed at 70.4, up from 67.4 in the month before and ahead of forecasts for a reading of 68.0.
The headline index was little changed versus its average level for over the previous four months of 70.6.
However, there was a sharp divergence between the share of lower income households who had turned more optimistic, in anticipation of stronger incomes, and middle and upper income households, which were now a bit less optimistic, Richard Curtin, the survey's director said.
The last time that he had observed such a large one-month improvement among lower-income households had been in June 1980.
"This suggests an emerging wage-price spiral that could propel inflation higher in the years ahead.
"When directly asked whether inflation or unemployment was the more serious problem facing the nation, 76% selected inflation while just 21% selected unemployment (the balance reported the problems were equal or they couldn't choose)."