U.S. Consumer Confidence Plummets to 11-Year Low: Report

by Thad Mitchell

A new survey suggests the confidence of United State’s consumers has dropped to its lowest point in 11 years just this month.

Consumer experts say the drop in confidence reflects American concerns over inflation and skyrocketing prices of common products, according to a Fox News report. The University of Michigan’s consumer sentiment index fell sharply to 61.7 this month. That number is quite a drop from the January score of 67.2. The survey shows the pain that many consumers are currently feeling, but also shows lower confidence in an economic rebound. The future expectations index went to 57.4, a drop from the previous 64.1 score. It also signifies a drop of 18.8% over the last year.

The survey’s chief economist Richard Curtin shared his thoughts on the survey’s findings.

“Sentiment continued its downward descent, reaching its worst level in a decade, falling a stunning 8.2% from last month and 19.7% from last February,” he says.

Curtin cites rising inflation, low confidence in economic policy, and a poor long-term economic outlook as reasons for the drop. The steep decline in consumer confidence lies entirely with households bringing in $100,000 or more yearly. The sentiment index among this group of consumers fell by 16.1% in early February from the previous month.

“The recent declines have been driven by weakening personal financial prospects, largely due to rising inflation, less confidence in the government’s economic policies, and the least favorable long-term economic outlook in a decade,” he says.

The impact of higher inflation on personal finances was cited by one-third of consumers, according to the report. The survey also found that nearly half of all consumers are expecting a decline in their inflation-adjusted incomes this year.

Consumer Senitment Index Reveals Waning Confidence in Economy

Robert Frick, corporate economist at the Navy Federal Credit Union, cites rising inflation as a primary concern among consumers.

“Mounting inflation drove down consumer sentiment this month to 2012 levels, when Americans were still reeling from the Great Recession,” he tells Fox News. “But will this cool down consumer spending and crimp the recovery? That’s doubtful, given spending and sentiment diverged when government stimulus put hundreds of billions into consumers’ bank accounts and spending rose while sentiment dropped.”

There are numerous issues weighing on the minds of U.S. consumers at the moment. Americans are still learning to cope with a global pandemic that’s been omnipresent for going on two years now. Rising tensions between the U.S. and Russia over Ukraine are also very much on the consumer’s mind.

Curtin notes that stimulus payments from the U.S. Government have allowed citizens to build up savings and reserves. This could lead to an increase in discretionary spending.

“Households have amassed substantial savings and reserve funds from the stimulus as well as due to more limited consumption choices, especially services,” he says. “There may be a lessened need for additional precautionary savings and a greater desire to engage in discretionary spending.”