US consumer confidence fell to an 11-year low in early February, reflecting growing concerns among Americans about overheating than expected. inflation The price of daily commodities skyrocketed.
The University of Michigan Consumer Confidence Index fell to 61.7 in February – sharply down from January’s reading of 67.2 and well below economists’ expectations for a reading of 67.5.
“Sentiment continued to decline, reaching its worst level in a decade, dropping an astonishing 8.2% from last month and 19.7% from last February,” Richard Curtin, the survey’s chief economist, said in a statement. “Recent declines have been driven by poor personal financial prospects, largely due to higher inflation, lower confidence in the government’s economic policies, and a less favorable long-term economic outlook in a decade.”
The decline was entirely among households with incomes of $100,000 or more, with the sentiment index down 16.1% in early February from the previous month.
The survey stated that a third of all consumers cited the impact of high inflation on personal finances as worrisome, with nearly half of all consumers anticipating a decline in their inflation-adjusted incomes over the next year.
The survey comes just a day after the Labor Department announced that the Consumer Price Index rose 7.5% in January from a year ago, marking the fastest increase since February 1982, when inflation hit 7.6%. The Consumer Price Index – which measures a range of goods ranging from gasoline and health care to groceries and rents – jumped 0.6% in the one-month period in December.
So-called core prices, which exclude the most volatile measures of food and energy, rose 6% in January from a year earlier — a sharp increase from December, when they rose 5.5%. This is the largest increase in 12 months since August 1982.
Rising inflation is erasing the strong wage gains American workers have seen in recent months: Average real hourly earnings rose just 0.1% in January from the previous month, as a 0.6% increase in inflation eroded 0.7% total wage gains. According to the Labor Department. On an annual basis, real earnings fell 1.7% in January.
“Rising inflation has lowered consumer sentiment this month to 2012 levels, when Americans were still suffering from the Great Recession,” said Robert Frick, an economist at Navy Federal Credit Union. “But will this reduce consumer spending and impede recovery? This is questionable, given differing spending and sentiment when government stimulus put hundreds of billions into consumers’ bank accounts and spending rose while sentiment declined.”
Meanwhile, the survey’s one-year inflation expectations jumped to 5.0%, the highest level since July 2008. Five- to ten-year inflation expectations were stable at an 11-year high of 3.1%.
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