The University of Michigan’s Consumer Sentiment Survey was released this morning, showing a slight decrease in consumer confidence in October over September’s figures.
Give Us Your Take: How Much Will You Spend Over the Holidays Relative to Last Year?Social Security Analysis: Why CPI-E Is ‘Better Index for Measuring Inflation’ In Terms of COLA for Seniors
Consumer confidence weakened slightly in October, declining to 71.7 in October’s final reading, representing a decline from September’s 72.8 figure. This came in slightly better than the flash estimate and the market expectation of 71.4, FX Street reports.
Survey of Consumers Chief Economist Richard Curtin said “The positive impact of higher income expectations and the receding coronavirus has been offset by higher rates of inflation and falling confidence in government economic policies.”
He added that consumers not only anticipated the highest year-ahead inflation rate since 2008 in the October survey, but that consumers also expressed greater uncertainty about the inflation rate for the year ahead than anytime in “nearly 40 years.”
Also surprising, this was “the first major spike in inflation uncertainty recorded outside of a recession.” This means that there have never been such high expectations of inflation without there already having been clear economic recession. To have these kinds of markers, outside of a recession, is historic.
It’s important to note that declining living standards due to inflation were spontaneously mentioned by at least 20% of households. These figures were also concentrated among older and poorer households.
Curtin also added that “the declining resistance to price hikes among buyers will be joined by less resistance among sellers to hiking prices that will be justified by higher materials and labor costs.” Notably, these reactions provide an environment conducive to ongoing upward inflationary pressures — that is until a “tipping point” is reached when consumers’ incomes can no longer keep pace with rising prices. He ends with the poignant reminder that in the past, one recession was not enough to tackle inflation, and that it required a “series of boom-bust” cycles until the only resolution was raising interest rates to record levels.
Inflation is currently up around 6% for the year.
More From GOBankingRates
- Find Out Who Made GOBankingRates’ Best Credit Cards Lists and Get Helpful Tips
- Social Security Benefits Might Get Cut Early — What Does It Mean for You?
- How To Use a Credit Card Like a Pro This Holiday Season
- What To Consider When Choosing a Mortgage Lender
Last updated: October 29, 2021