The consumer sentiment index fell to a decade low in early November data collected by the University of Michigan. The culprit: pandemic-era inflation problems and concerns that there are no policies to contain them. Consumers had also expected the supply chain crisis and labor shortage to be resolved by now.
With the holidays -proaching, Americans are preparing for higher prices and longer waiting times for their orders. So far, rising wages, a steady recovery in the labor market, and increased savings have kept people’s spending and the US economy going.
But the negative sentiment regarding the challenges to the economy outweighed many of the positive factors, including the r -id growth in employment and soaring paychecks.
“Sentiment has been shaken in recent months amid the recent Covid outbreak and weakening economic stimulus, but the name of inflation in November bears the name of inflation,” Wells Fargo economists said in a note.
One in four respondents said inflation had worsened their standard of living. Despite higher paychecks, half of respondents expect inflation to wipe out any wage increases they received over the past year.
According to Richard Curtin, chief economist for the University of Michigan consumer survey, consumers complained more than ever in more than 50 years about rising prices for houses, cars, and other durable goods such as household -pliances.
“Until supply and demand can strike a balance, the economy is in a waiting game until the pandemic-induced price increases finally subside,” said Wells Fargo economists.
The statement that the current price hikes are “temporary” and will not last forever – a language used by the Federal Reserve and the Biden administration – suggests that the American people should just sit still and wait, even though Washington’s policies should Problem still needs to be solved. said Curtin.
In addition, political affiliations influence how people process information about the economy.
“Partisans close to the presidential party have taken on very positive sentiments and those in the opposing camp have taken on very negative sentiments,” said Curtin.