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Economic Report: Consumer sentiment at decade lows amid ‘rapidly escalating inflation,’ UMich survey finds

The numbers:  The University of Michigan’s gauge of consumer sentiment rebounded to a final November reading of 67.4 from an initial reading of 66.8, but below the October reading of 71.7.

Economists polled by the Wall Street Journal expected an index reading of 66.8, in line with the preliminary November figure released earlier this month.

Key details: A gauge of consumer’s views of current conditions fell in November to 73.6 in from 77.9 in October, while an indicator of expectations fell to 63.5 in November from 67.9 in the previous month.

Household inflation expectations for the next 5 years came in at 3%, above its pre-pandemic level of 2.3%. Expectations for 1-year inflation rose to 4.9%, it’s highest level since the summer of 2008, from 4.8% in October.

Big picture: Consumers remain primarily concerned with high levels of inflation, and report falling living standards as a result of higher prices for a wide range of goods.

What UMich is saying: “Consumers expressed less optimism in the November 2021 survey than any other time in the past decade about prospects for their own finances as well as for the overall economy,” Richard Curtin, chief economist for the UMich survey said in the report. “The decline was due to a combination of rapidly escalating inflation combined with the absence of federal policies that would effectively redress the inflationary damage to household budgets.”

Market reaction: U.S. stocks
SPX,
-0.28%

were trading lower Wednesday morning, led by the tech-heavy Nasdaq
COMP,
-0.36%
.

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