Consumer optimism in the U.S. drops to lowest level in a decade

The latest data showed that U.S. consumer confidence has fallen to a decade low due to concerns about rising inflation.

According to the University of Michigan's November consumer survey data released on Wednesday , a quarter of respondents believe inflation has eroded their living standards , with the index now at 67.4%, down from 71.7% in October.

Richard Curtin, chief economist for the University of Michigan's Survey of Consumers, said in a statement that U.S. consumers were less optimistic about their own finances and the overall economic outlook in the November 2021 survey than at any time in the past decade.

The economist also said that rapidly rising inflation, coupled with the lack of federal policies to effectively correct the damage that inflation has done to household budgets , has led to a decline in consumer optimism . While supply line shortages caused by the epidemic are reportedly a contributing factor, the sources of inflation have grown and spread widely throughout the economy.

While consumer sentiment in the U.S. is not optimistic, the Federal Reserve's personal consumption expenditures price index, which is used as an inflation indicator, reached its highest level in 31 years . The report said that the index has soared 5% in the year ending last month . According to the personal consumption expenditures price index data released on Wednesday morning, prices soared 5% in the year ending in October. Exceeding last month's estimate , this is also the fastest growth rate since November 1990 .

It is understood that prices rose 0.6% in the month from September to October (excluding food and energy costs, 0.4%). The surge in inflation largely reflects the surge in energy costs (up 30.2% year-on-year) and food costs (up 4.8% over the same period). The data showed that service inflation rose 6.3% in October and commodity inflation rose 7.3%, up from 6.4% a month ago.

Meanwhile, the Commerce Department reported that household spending in the U.S. rose 1.3% in October from the previous month, while personal income rose 0.5%. Spending on both large and small items increased 2.2% .

The report comes as Federal Reserve policymakers grapple with higher and more persistent inflation than they initially expected.

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