https://sputnikglobe.com/20211029/us-consumer-sentiment-remains-at-risk-from-surging-inflation-survey-shows-1090322622.html
US Consumer Sentiment Remains at Risk From Surging Inflation, Survey Shows
US Consumer Sentiment Remains at Risk From Surging Inflation, Survey Shows
Sputnik International
WASHINGTON (Sputnik) - US consumer sentiment remains at risk from soaring inflation although Americans seem resigned to higher costs from economic upheavals... 29.10.2021, Sputnik International
2021-10-29T17:43+0000
2021-10-29T17:43+0000
2022-08-06T13:54+0000
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"People understand that the origin of inflation has been in the upheavals in supply lines and labour markets," UMich’s Surveys of Consumers chief economist Richard Curtin said. "The declining resistance to price hikes among buyers will be joined by less resistance among sellers to hiking prices that will be justified by higher materials and labour costs."The joint effects of these can lead to preconditions that escalate inflation in the year ahead too, said Curtin.The combined reaction of consumers and sellers will boost inflation "until a tipping point is reached when consumers' incomes can no longer keep pace with escalating inflation," Curtin said.The UMich survey was published as the data on Friday showed the US Federal Reserve’s annual inflation gauge hitting a 30-year high in September, keeping the pressure up on the central bank’s policymakers as well as the Biden administration in reigning in surging costs.UMich’s final survey for October showed little change in consumer response toward inflation, with its Consumer Sentiment Index falling to 71.7 last month from 72.8 in September while the Consumer Expectations Index declined to 67.9 from 68.1. At least 70% of all US economic activity is generated by its consumers.The US economy shrank by 3.5% for all of 2020 due to shutdowns and other disruptions caused by the COVID-19 crisis. Growth this year has been spotty, with an annualized 3.5% expansion in the first quarter, 3.6% in the second and 2.0% in the third.The Fed envisions a 6.5% expansion for all of this year, although some officials at the central bank have more ambitious expectations, forecasting growth of up to 7.0%.The problem for the Fed though is inflation as wages and the prices of almost everything, from coffee to oil and building materials, have soared from the lows of the pandemic.
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US Consumer Sentiment Remains at Risk From Surging Inflation, Survey Shows
17:43 GMT 29.10.2021 (Updated: 13:54 GMT 06.08.2022) WASHINGTON (Sputnik) - US consumer sentiment remains at risk from soaring inflation although Americans seem resigned to higher costs from economic upheavals caused by the coronavirus pandemic, the University of Michigan said on Friday in the latest iteration of its closely-watched consumer survey.
"People understand that the origin of inflation has been in the upheavals in supply lines and labour markets," UMich’s Surveys of Consumers chief economist Richard Curtin said. "The declining resistance to price hikes among buyers will be joined by less resistance among sellers to hiking prices that will be justified by higher materials and labour costs."
The joint effects of these can lead to preconditions that escalate inflation in the year ahead too, said Curtin.
The combined reaction of consumers and sellers will boost inflation "until a tipping point is reached when consumers' incomes can no longer keep pace with escalating inflation," Curtin said.
"In the past inflationary era, one recession was insufficient to realign expectations; it required a series of boom-bust cycles," he said, adding that the US Federal Reserve finally broke the trend by raising interest rates to record highs in the 1980s.
The UMich survey was published as the data on Friday showed the US Federal Reserve’s annual inflation gauge hitting a 30-year high in September, keeping the pressure up on the central bank’s policymakers as well as the Biden administration in reigning in surging costs.
UMich’s final survey for October showed little change in consumer response toward inflation, with its Consumer Sentiment Index falling to 71.7 last month from 72.8 in September while the Consumer Expectations Index declined to 67.9 from 68.1. At least 70% of all US economic activity is generated by its consumers.
The US economy shrank by 3.5% for all of 2020 due to shutdowns and other disruptions caused by the COVID-19 crisis. Growth this year has been spotty, with an annualized 3.5% expansion in the first quarter, 3.6% in the second and 2.0% in the third.
The Fed envisions a 6.5% expansion for all of this year, although some officials at the central bank have more ambitious expectations, forecasting growth of up to 7.0%.
The problem for the Fed though is inflation as wages and the prices of almost everything, from coffee to oil and building materials, have soared from the lows of the pandemic.
