Consumers’ worries about inflation and the ongoing coronavirus epidemic caused the final Consumer Sentiment Index for January from the University of Michigan to drop significantly from its previous reading of 70.6 to 67.2 on Friday.
Richard Curtin, the survey’s senior economist, noted that sentiment “dropped throughout January, marking a total loss of 4.8%, plummeting to its lowest level since November 2011.”
The decline in confidence is accompanied by record-high inflation, with consumer prices increasing by 7% on an annual basis in December, as well as the broad distribution of the coronavirus’s omicron form.
Additionally, it happens as the Federal Reserve prepares to raise interest rates, most likely in March, and surveys show growing dissatisfaction with President Joe Biden’s management of the economy.
However, it also conflicts with economic statistics, which indicates that the economy is expanding at its fastest rate since the Reagan era and that unemployment is almost at record low levels. Americans are irritable, though, as store shelves are devoid of essential items and rising salaries can’t keep up with inflation. The constant bickering in Congress over issues like Biden’s Build Back Better program contributes to the depressing atmosphere.
The Progressive Policy Institute’s founder and president, Will Marshall, wrote in The Hill on Friday that “Americans are having problems seeing the Biden boom through the cloud of inflation, which has risen after thirty years in sleep.”
Biden visited Pittsburgh on Friday to promote his administration’s $1 trillion infrastructure bill, which Congress passed with a small number of Republican votes, as part of his ongoing effort to travel outside of Washington.
Nevertheless, the president faces a difficult future in 2022 as consumers experience the effects of an economy that is anticipated to decelerate from its growth rate in 2021 and as interest rates on consumer loans and mortgages rise.