US consumer sentiment falls to 10-year low amid inflation woes
US consumer sentiment unexpectedly deteriorated in November amid growing worries about inflation, according to a preliminary reading from the University of Michigan.
The Michigan sentiment index fell to 66.8 from 71.6 in October and 76.9 in November 2020.
The index of current economic conditions came in at 73.2 in November, down from 77.7 the month before and 87.0 in November last year.
The gauge for consumer expectations printed at 62.8 versus 67.9 in October and 70.5 in the same month a year ago.
Surveys of Consumers chief economist, Richard Curtin, noted that consumer sentiment fell to its lowest level in a decade. He put this down to an escalating inflation rate and the growing belief among consumers that no effective policies have yet been developed to reduce the damage from surging inflation.
"One-in-four consumers cited inflationary reductions in their living standards in November, with lower income and older consumers voicing the greatest impact. Nominal income gains were widely reported but when asked about inflation-adjusted gains, half of all families anticipated reduced real incomes next year. Rising prices for homes, vehicles, and durables were reported more frequently than any other time in more than half a century.
"The reactions of consumers to surging inflation should be no surprise, as it has been reported during the past several months. The description that inflation would be ‘transient’ has the undertone that consumers could ‘grin and bear it’ as economic policies counted on a quick and automatic self-correction to supply and labour shortages. Instead, the pandemic caused economic dislocation unlike any prior recession, and has been intertwined with partisan interpretations of economic developments."