By Xavier Fontdegloria
Sentiment among U.S. consumers remained subdued in mid January, deteriorating to a decade-low, as high inflation and the Covid-19 Omicron wave weighed on moods.
The final reading of the index of consumer sentiment compiled by the University of Michigan was 67.2 in January, below the preliminary estimate of 68.8 and down from 70.6 in December.
January's reading, which came in below the 68.5 expected by economists, is the lowest since November 2011.
American consumers' primary concern is rising inflation and falling real incomes, said Richard Curtin, the survey's chief economist. Overall confidence in government economic policies is at its lowest level since 2014, he said.
Consumers' expected inflation rates ticked up in January compared with December. For the next year, Americans see prices increasing 4.9% from an expected 4.8% the previous month, and for the next five years they anticipate prices to rise 3.1% from 2.9%.
"Consumers may misinterpret the Fed's policy moves to slow the economy as part of the problem rather than part of the solution," Mr. Curtin said. There is a danger that consumers overreact to the Fed moves, especially given the uncertainties about the coronavirus and other geopolitical risks, he said.
In January, the index measuring Americans' assessment of the current economic conditions fell to 72.0 from 74.2 in December. The preliminary early-month reading came in at 73.2.
The index of consumer expectations, which reflects the balance of respondents anticipating improved business conditions in the next six months, decreased to 64.1 from 68.3 in December, and also declined compared with the preliminary estimate of 65.9.
Write to Xavier Fontdegloria at firstname.lastname@example.org
(END) Dow Jones Newswires