US consumer sentiment falls as inflation concerns rise | Business and Economic News

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Rising food, gas and housing costs are eroding consumer purchasing power, despite rising wages.
Who Bloomberg
Posted on November 12, 2021
U.S. consumer sentiment fell unexpectedly in early November as Americans became increasingly concerned about rising prices and financial inflation.
The University of Michigan’s preliminary sentiment index fell to 66.8 from 71.7 in October, data released on Friday showed. The November figure went up to 72.5, following all the forecasts in a Bloomberg survey of economists.
The decline in confidence is “a rise in inflation and a growing belief among consumers that no effective policy has yet been developed to reduce the damage caused by rising inflation,” Richard Curtin, the survey’s director, said in a statement.
Consumers expect inflation to rise by 4.9% next year, the highest since 2008, the report shows. Over the next five to 10 years, prices are expected to rise by 2.9% compared to the previous month.
“One in four consumers cited inflationary reductions in their living standards in November, with lower incomes and older consumers indicating the greatest impact,” Curtin said.
Rising food, gas and housing costs are eroding consumers ’purchasing power, despite rising wages. According to the data, about half of all families forecast inflation-adjusted income falls next year. Sentiment figures show the highest inflation rate in three decades at the beginning of the week, according to government data.
Although consumers are being disturbed by the impact of inflation on buying conditions, household spending showed signs of improvement at the end of a soft third quarter.
“Looking ahead, the risk is huge, with sustained price increases entering the psyche of consumer inflation,” Church economist Winger Bloomberg said in a statement. “In the short term, shortages and prices should limit inflation-adjusted spending.”
Political influence
President Joe Biden earlier this week said in a statement that tackling rising inflation is a “top priority” for him, as the acceptance rate is falling. Michigan figures showed deep divisions in partisan parties. Sentiment among Republicans fell 17 points to the lowest recorded, and in the case of Democrats surveyed, it fell 5.3 points.
The Michigan report showed that conditions for the purchase of household goods deteriorated significantly, and one meter fell to a reading of 78, the second lowest figure in 1978. housing.
24 percent of households expect it to be worse next year, the highest since June 2008, according to Curtin.
The current condition gauge dropped to 73.2, the lowest since 2011. The measure of future expectations fell to 62.8, which was the weakest since 2013, according to the survey.
Americans are also more pessimistic about the outlook for the economy for the next five years. The university’s gauge has dropped to its lowest since 2011.
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