Americans have turned decidedly gloomy about their financial outlook, and inflation is the main cause of the anxiety, according to a survey released Friday.
The University of Michigan reported that its survey of consumer sentiment fell to its lowest level in a decade in early November. It attributed the decline to “the growing belief among consumers that no effective policies have yet been developed to reduce the damage from surging inflation.”
Hampered by supply chain disruptions and labor shortages in some industries, the economy has been straining under rising prices. The government this week reported the steepest inflation in 31 years, with a 6.2 percent increase in prices in October from a year earlier.
In the Michigan survey, “rising prices for homes, vehicles and durables were reported more frequently than any other time in more than half a century.” But inflation is hardly limited to big-ticket purchases — food items like meat are getting more expensive, driving up the cost of preparing Thanksgiving meals.
Many policymakers have assumed that higher inflation would be transitory, a result of the uneven reopening of the economy after widespread shutdowns because of the coronavirus pandemic.
Investors, too, have shrugged off the threat of inflation, even though it can erode the value of financial assets. Bond yields, which move higher in times of inflation, remain low by historical standards. And the stock market is near record highs, despite the uptick in prices lately.
But the Michigan survey is a sign that consumers are beginning to feel pinched. The survey reflected a downturn in assessments of both current conditions and economic prospects.
“Consumers are angry about inflation,” said Diane Swonk, chief economist at the accounting firm Grant Thornton in Chicago.
“Inflation will get worse before it gets better,” Ms. Swonk said. “It could moderate by the spring of 2022, and it does affect how people feel about the economy.”
But consumers in the United States continue to spend at robust levels, she said, and the odds look good for a robust holiday shopping season.