U.M. consumer confidence falls to its lowest level in a decade

U.M. consumer confidence falls to its lowest level in a decade

In January, a survey of American consumer sentiment fell to 68.8 from 70.6 in the previous month due to concerns about the coronaviruses omicron variant and high inflation, signalling another rough patch for the economy.

The latest reading in the University of Michigan sentiment index was the second lowest in the past decade. The index fell to 67.4 in November, at the tail end of the delta wave of coronavirus cases.

Richard Curtin, chief economist of the survey, said that while the Delta and Omicron variants certainly contributed to the downward shift, the decline was due to an escalating inflation rate.

Big picture: The U.S. economy has been sidetracked by the delta and then omicron strains of the coronaviruses.

The highest inflation in almost 40 years is another big problem. The businesses can't keep up with strong demand because of the persistent supply and labor shortages.

Economists predict that the U.S. will bounce back quickly if the coronaviruses surge fades and supply chain bottlenecks start to lessen. Savings and jobs are plentiful in the U.S. households.

They say that if inflation doesn't go well soon, it could spur a pullback in consumer spending and dent the economy.

Three-quarters of the people in the survey ranked inflation as the economy's biggest problem.

The decline in sentiment was most acute among households earning less than $100,000 a year. The confidence in the government fell to an eight-year low. There's lots of discontent with Washington's response to high inflation and the high-inflation virus.

Senior U.S. economist Andrew Hunter, of Capital Economics, said that consumers were more concerned about surging inflation, which is likely to prove a longer lasting worry.

Market reaction: Dow Jones Industrial Average DJIA and S&P 500 SPX fell in Friday trades. Stocks have gone up and down the past week.