Several economic indicators have been released this week that show troubling signs for the economy, but perhaps the most concerning indicator is a recent plunge in consumer sentiment.
The University of Michigan’s Consumer Sentiment Index plunged to its lowest level in a decade in early November primarily as a result of increasing inflation.
The University said there is also, “the growing belief among consumers that no effective policies have yet been developed to reduce the damage from surging inflation.”
In fact, “one-in-four consumers cited inflationary reductions in their living standards in November, with lower income and older consumers voicing the greatest impact. Nominal income gains were widely reported but when asked about inflation-adjusted gains, half of all families anticipated reduced real incomes next year.”
Federal inflation data released this week showed wholesale prices rose a whopping 8.6% while the consumer price index rose the fastest in decades.
That rise in inflation hikes the prices for all kinds of goods and services, from the car you buy to the gas you put in it.
“Rising prices for homes, vehicles, and durables were reported more frequently than any other time in more than half a century. The reactions of consumers to surging inflation should be no surprise, as it has been reported during the past several months,” the University said.
Meanwhile, the University seemed to take aim at the economists and lawmakers that have suggested inflation was temporary, writing, “The description that inflation would be ‘transient’ has the undertone that consumers could ‘grin and bear it’ as economic policies counted on a quick and automatic self-correction to supply and labor shortages. Instead, the pandemic caused economic dislocation unlike any prior recession, and has been intertwined with partisan interpretations of economic developments.”
Recent concerns about inflation are coming at a political cost to President Joe Biden. A recent poll by CNN showed that 72% of Americans do not think he is focused on the issues that matter most to them.