U.S. Consumer Sentiment Falls to Decade Low on Inflation Woes
(Bloomberg) -- U.S. consumer sentiment dropped in November from a month earlier to a decade low as higher prices continued to erode Americans’ spending power.
The University of Michigan’s final sentiment index fell to 67.4 during the month from 71.7 in October, data released Wednesday showed. That was a bit better than the preliminary reading of 66.8 and the median estimate in a Bloomberg survey of economists.
“While pandemic induced supply-line shortages were the precipitating cause, the roots of inflation have grown and spread more broadly across the economy,” Richard Curtin, director of the survey, said in a statement.
Respondents said they expect inflation to rise 3% over the next 5 to 10 years, up slightly from the preliminary reading. They expect prices to advance 4.9% over the next year, the highest since 2008.
While the labor market continues to improve, consumer prices are rising at the fastest pace in decades. Personal spending, which sharply slowed in the third quarter, is poised to reaccelerate in the final three months of the year, but some are worried the recent slump in sentiment may presage weaker demand ahead.
“Rather than gradually easing along with diminished shortages, complaints about falling living standards doubled in the past six months,” Curtin said.
A measure of buying conditions for household durable goods decreased to the second lowest in University of Michigan data back to 1978.
The gauge of current conditions fell to 73.6, while the measure of future expectations decreased to 63.5.
An alternative gauge of consumer sentiment -- which places greater emphasis on views of the labor market -- will be released by the Conference Board next week.
©2021 Bloomberg L.P.