US consumer sentiment remains at decade low as inflation bites | Technology News

Americans are facing decades-high inflation, prompting the Fed last week to raise rates for the first time since 2018.

US consumer sentiment continued to worsen in late March to a fresh decade low as inflation erodes incomes, heightened by uncertainty over Russia’s invasion of Ukraine.

The University of Michigan’s sentiment index dropped to 59.4 from 59.7 earlier in the month, data released Friday showed. The median estimate called for no change in a Bloomberg survey of economists.

A gauge of current conditions decreased to 67.2 from 67.8 earlier in the month. The survey’s measure of future expectations were little changed at the lowest since 2011.

Consumers still expect inflation to rise 5.4% over the next year. They expect prices will increase at an annual rate of 3% over the next five to 10 years, unchanged from February. While still above the Federal Reserve’s target rate, it may offer some comfort to the central bank that long-term expectations remain anchored.

Americans are facing decades-high inflation, prompting the Fed to raise rates for the first time since 2018 last week. Price pressures, which are outpacing wage gains, have only worsened as Russia’s war in Ukraine enters its second month, driving up the cost of staples like food and gasoline.

About a third of consumers expect their overall financial position to worsen in the year ahead, the highest recorded level since the survey began in the mid 1940s, the report said. Furthermore, more consumers mentioned reduced living standards due to rising inflation than any other time except during the recessions seen in the late 1970s and 2008.

Many economists worry about how inflation will affect consumer spending as Americans are left with less discretionary income, with buying attitudes at record lows. That presents a risk to economic growth, and several forecasters have already lowered their expectations. Inflation-adjusted consumer spending data for February will be released next week.

From a political perspective, Republicans report a much higher awareness of inflation. When asked how their finances have recently changed, half of Republicans mention inflation compared to 19% of Democrats.

–With assistance from Chris Middleton.