November saw U.S. consumer sentiments drop further compared to a month earlier touching a decade low as Americans’ spending power continues to get eroded due to rising prices.
The final sentiment index of the University of Michigan’s dropped to 67.4 during November, though it was better than initial readings of 66.8 as per Bloomberg’s survey as a month. That was a bit better than the preliminary reading of 66.8 and the median estimate in a Bloomberg economists survey. The October sentiment index was 71.7 as per data released on Wednesday.
According to Richard Curtin, the survey director, the root cause was the widespread inflation across the economy; the supply shortages caused by the Pandemic were another precipitating factor.
Inflation is expected to rise to 3% during the next five to ten years according to the respondents in the survey. This is slightly up from the preliminary readings and next year inflation rate is expected to be 4.9%, highest since 2008.
Even though the labor market sees improvement, consumer prices are rising at the fastest rate. Personal spending is expected to accelerate in the last three months of the year after a sharp decline in the previous quarter. However, some people are worried that the recent dampened sentiments may press weaker demands in the coming months.
As per Curtin’s, complaints about living standards falling has doubled in the last six months instead of easing it even as backed by shortages eased.
The buying of household durable goods indicator can be measured as it decreased to the second-lowest since 1978 data of the University of Michigan. The indicator for the current conditions dropped to 73.6 while the future expectation measures at 63.5 as per Bloomberg news.
Next week, an alternative indicator of consumer sentiment will be released by the Conference Board. This indicator places broader emphasis on the labor market scenario.