Consumer Sentiment Slid 6.8% to 66.8 in Early Nov., Lowest in a Decade
Ann Arbor, MI, November 12, 2021-Consumer sentiment slid 6.8% in early November to 66.8, according to the University of Michigan Survey of Consumers.
This represents a 13.1% decline year over year.
“Consumer sentiment fell in early November to its lowest level in a decade due to an escalating inflation rate and the growing belief among consumers that no effective policies have yet been developed to reduce the damage from surging inflation,” says Survey of Consumers chief economist Richard Curtin. “One-in-four consumers cited inflationary reductions in their living standards in November, with lower income and older consumers voicing the greatest impact. Nominal income gains were widely reported but when asked about inflation-adjusted gains, half of all families anticipated reduced real incomes next year. Rising prices for homes, vehicles, and durables were reported more frequently than any other time in more than half a century. The reactions of consumers to surging inflation should be no surprise, as it has been reported during the past several months. The description that inflation would be ‘transient’ has the undertone that consumers could ‘grin and bear it’ as economic policies counted on a quick and automatic self-correction to supply and labor shortages. Instead, the pandemic caused economic dislocation unlike any prior recession, and has been intertwined with partisan interpretations of economic developments.
“The moods of consumers play a central role in how information is processed. Positive moods promote more casual and less detailed information processing, and negative moods promote more formal and deliberate information processing, especially of potentially negative developments. Partisans aligned with the President's party have adopted very positive moods, and those in the opposing camp very negative moods. As a result, partisan supporters of one or the other presidents either mentioned or ignored rising home and stock values, inflation and income growth rates, or mentioned or ignored employment or unemployment rates, and so forth. The partisan differences in perceptions were not minor, but were large and equal in size."