American Consumer Sentiment Plunges While Inflation Expectations Rise
American Consumer Sentiment Plunges While Inflation Expectations Rise

By Naveen Athrappully

Consumer sentiment fell last month while expectations of inflation among the general populace rose, according to a University of Michigan survey that is closely followed by the Federal Reserve.

The Index of Consumer Sentiment came in at 54.7 in November, down 8.7 percent from 59.9 in October, data from the surveys of consumers conducted by the university showed. On a yearly basis, the index decreased by 18.8 percent. With the decline, the index has erased roughly half the gains recorded since the historic low registered in June.

All components of the index fell for the month, with the buying conditions for durables falling the most with a decline of 21 percent due to high prices and interest rates.

The fall in consumer sentiment was observed irrespective of age, income, political affiliation, geography, and education, potentially signaling that the recent improvement seen in sentiment was only tentative.

With regard to inflation, “the median expected year-ahead inflation rate was 5.1 percent, up from 5.0 percent last month. Long-run inflation expectations, currently at 3.0 percent, have remained in the narrow (albeit elevated) 2.9-3.1 percent range for 15 of the last 16 months,” survey director Joanne Hsu said in the results.

The Michigan University survey results come as latest government data showed the 12-month Consumer Price Index (CPI) rising by 7.7 percent in October, down from 8.2 percent in September and this year’s peak of 9.1 percent in June.

In a statement to The Epoch Times, Greg McBride, chief financial analyst at Bankrate, warned that though the October CPI came in below investor expectations, it does not mean that the fight against inflationary pressure is over.

“If this constitutes improvement, we’ve set a very low bar,” he said while adding that the “pervasiveness” of price increases continues to remain a problem.

Fed Policy

The consumer expectation survey of Michigan University is something that the Federal Reserve keeps an eye on and influences their decisions regarding interest rates.

During a press conference in June that followed a hike in interest rates by 0.75 percentage points, Fed Chair Jerome Powell admitted that the Michigan survey pushed the central bank to increase the interest hike from 0.5 percent to 0.75 percent.

In a recent interview with Reuters, Jeffrey Roach, chief economist at LPL Financial in Charlotte, North Carolina, said that the Fed has “telegraphed their intentions to slow the pace of rate increases and this report will not likely alter those intentions.”

“However, those views could change if inflation expectations reach the elevated levels [of] earlier this year.”

At the beginning of 2022, the Fed was maintaining its benchmark interest rate at 0.25 percent. This has been pushed up to a range of 3.75 to 4 percent at present.

Speaking to the Financial Times, David Wilcox from the Peterson Institute for International Economics pointed out that every adverse inflation report and adverse development in the world “implies” that the Fed is going to have to “do more” to bring the situation under control.

“Doing more means a higher probability of a recession, and if it happens, in all likelihood a deeper recession.”

Affiliate News Feeds

  • Reuters
  • Washington Examiner
  • The Federalist
  • The Epoch Times
  • The Guardian
  • The Gateway Pundit
  • Judicial Watch

By Tom Ozimek Elon Musk suggested that Twitter was acting under government orders to suppress free speech, with his remarks coming hot on the heels of the release of a trove of… [...]

By The Associated Press PALMDALE , Calif.—America’s newest nuclear stealth bomber made its debut Friday after years of secret development and as part of the Pentagon’s answer to rising concerns over a future… [...]

Union workers are lashing out at both political parties and President Joe Biden for the rail legislation signed to prevent a strike, calling the provisions a "slap in the face"… [...]

A former professor at the University of California San Diego said she gave all of her students "A" grades and no homework in a recently unearthed video. [...]

Usually when a person defrauds investors of millions of dollars and launders the funds to personal pet projects, he goes to jail. (See: Bernie Madoff.) But in FTX founder Sam… [...]

Insider documents released on Friday confirm Twitter’s decision to suppress the New York Post’s legitimate reporting about Hunter Biden’s laptop mere weeks before the 2020 presidential election was a political… [...]

A Department of Justice (DOJ) watchdog is seeking an independent examination into the collapse of cryptoexchange FTX, according to a recent court filing. The Justice Department is already investigating the… [...]

The State of Wyoming filed a second lawsuit against the Biden Administration, alleging that its suspension of oil lease sales were illegal. Gov. Mark Gordon (R-Wyom.) announced that his state… [...]

Minister says troops are on standby to replace striking ambulance workers and border staffThe Conservative party chairman has said the military is on standby to take the place of striking… [...]

Exclusive: Stage sequel to focus on then housing secretary, fire chief and two families devastated by 2017 fireA play dramatising the “merry-go-round of buck-passing” at the Grenfell Tower public inquiry… [...]

Over the last few years, the U.S. Military has been politicized by the left. This is having the unfortunate effect of eroding the public’s trust in the institution. Just in… [...]

In Elon Musk’s most recent Twitter Space, Musk shared how he felt about Ye’s recent Twitter ban. The usually calm and collected Musk let out a rare burst of raw… [...]

Secret Service Repeatedly Changes Its Story on Hunter Biden Gun Records What is the Secret Service Hiding about Biden Raid on Trump’s Home? Judicial Watch Sues to Find Out! Judicial… [...]

From Fox News: The Secret Service will not say why they changed their position regarding a government watchdog’s records request into Hunter Biden’s gun investigation records. Government watchdog Judicial Watch… [...]

NH Politician

NH POLITICIAN is owned and operated by USNN World News Corporation, a New Hampshire based media company specializing in the collection, publication and distribution of public opinion information, local,...