Consumer sentiment fell to the lowest level in a decade as the economy sees high inflation, supply chain problems, and widespread labor market disruptions.
The University of Michigan Consumer Sentiment Index plunged to 66.8 in early November, from 71.7 in October, according to preliminary numbers released Friday. The drop represents a 6.8% decline from last month and about a 13% dip from a year ago. The number was far below the Dow Jones estimate of 72.5.
“One in four consumers cited inflationary reductions in their living standards in November, with lower-income and older consumers voicing the greatest impact,” said Richard Curtin, director of the survey. “Nominal income gains were widely reported, but when asked about inflation-adjusted gains, half of all families anticipated reduced real incomes next year.”
Consumer sentiment is now lower than it was in the worst days of the pandemic-induced recession, which lasted for two months last year.
The news comes as inflation hit its highest rate in 30 years, clocking in at 6.2% for the year ending in October, above consensus expectations of 5.8%. The new inflation numbers were released by the Labor Department on Wednesday.
While the Federal Reserve has consistently said it expects higher prices to be transitory, some economists have pushed back on that assertion. The central bank’s monetary policy committee recently raised projections for this year’s inflation rate to 4.2%, compared to its prior projection of 3.4%.
Further news of dislocation this week came in the form of the monthly Job Openings and Labor Turnover Survey report. About 4.4 million workers quit their jobs in September, about 100,000 more than the month before. The number of people quitting is the highest since the United States began keeping records about two decades ago.