Consumer Sentiment Drops Due to Surging Inflation, Pandemic Woes

Sentiment among American consumers fell in early January, with the University of Michigan’s monthly confidence survey blaming the decline on pandemic worries and concerns about high inflation. The University of Michigan’s Consumer Sentiment index fell to a reading of 68.8 in January from 70.6 in December, bringing the gauge closer to November’s level of 67.4, which was the lowest in a decade. “While the Delta and Omicron variants certainly contributed to this downward shift, the decline was also due to an escalating inflation rate,” Richard Curtin, the survey director, said in a statement. Consumer price inflation climbed to 7 percent in the 12 months through December, the fastest pace since June 1982. While average weekly earnings rose 4.7 percent within the same time frame, the higher rate of inflation means those income gains have been more than erased, with real wages well in negative territory and at their lowest reading since 2011. Curtin said …

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