Consumer Confidence Sags To Lowest Seen In 10 Years

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Snarls at American ports have exacerbated supply chain woes that are threatening to wreak havoc on the 2021 Christmas shopping season
Snarls at American ports have exacerbated supply chain woes that are threatening to wreak havoc on the 2021 Christmas shopping season

Americans are still waiting for better days for the economy. On Wednesday, a survey found consumer sentiment at its lowest point since the aftermath of the Great Recession. 

"Consumers expressed less optimism in the November 2021 survey than any other time in the past decade about prospects for their own finances as well as for the overall economy," said Richard Curtin, the chief economist for the survey of consumers by the University of Michigan. 

The University of Michigan's index for consumer sentiment fell to 67.4, a 6% drop from where it stood in October, in a sign that Americans' expectations of better economic conditions have sagged. This was reflected also in their measurement for assessing current economic conditions, which fell 5.3% to 73.6 while the index for consumer expectations recorded a larger drop of 6.5% in the last month.

Core inflation did not stand still either. In the most recent measurement for personal consumption expenditures — an important barometer for wider inflation in the U.S economy — rose by 0.6% in October, the highest seen since December 1990. 

Inflation has emerged as the defining issue for policymakers at the White House and Federal Reserve. Prices continue their ascent amid choked supply chains on top of trillions in government spending to fight the COVID-19 pandemic. 

President Joe Biden has taken aim at new partnerships at home and abroad to unwind the supply chain bottlenecks that have driven up prices. The White House also announced the formation of a Supply Chain Disruption Task Force in July to coordinate efforts to bring prices down and goods to market. On Nov. 3, the Federal Reserve also began its tapering off of the multibillion-dollar monthly purchases that began at the start of the pandemic. 

For both the Fed and the White House, the view they have held throughout the year has been that inflation was "transitory," or temporary. However, consumers have signaled that they do not share that outlook as the prices of basic goods have continued to climb. 

Curtin notes that complaints about living standards have nearly doubled in the last six months and quintupled in the last year, underscoring consumers’ growing despair. 

However, Curtin did highlight a silver lining from his data. Now that the holiday season is here and public health restrictions have eased, he said that consumers are eager to reunite with loved ones and make good use of their accumulated savings for the occasion.

On Wednesday, the Department of Commerce released its latest data on personal spending on goods in which jumped $123.8 billion while spending on services rose by  $90.5 billion. Most of this spending has been recorded for motor vehicles and parts, and recreational goods like electronic goods. Household spending as a whole rose 1.3% in October from September in line with a slight increase of 1.5% in personal incomes.

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