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News for March 27, 2023

Consumer Confidence Plummeted This Month as Inflation Persists


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US consumer confidence dropped in October, bringing it to its lowest since July as the high borrowing cost and soaring inflation strain household budgets.

According to a report, data released by the Conference Board reveals that the consumer confidence index fell to 102.5 from a revised 107.8 in September.

Economists were anticipating a reading of 106.5, per estimates from Refinitiv. A reading above 100 signals consumers has an optimistic attitude toward the economy. In February 2020, the consumer confidence index was 132.6.

Consumer spending, which fuels the US economy, has been robust since the beginning of the pandemic, with record-breaking purchases during lockdowns filled by a surge in travel and dining out once restrictions were lifted.

But an imbalance in global demand and supply has caused the current round of decades-long-high rates of inflation within the United States, which the Federal Reserve is trying to reduce through a series of rate hikes. This has increased borrowing costs, resulting in the overall cost for consumers; some have even started limiting their spending.

The outlook for consumers’ short-term future is “dismal,” said Lynn Franco, the conference board’s senior director of economic indicators.

“Notably, concerns about inflation — which had been receding since July — picked up again, with both gas and food prices serving as main drivers,” Franco said in a statement.

“Looking ahead, inflationary pressures will continue to pose strong headwinds to consumer confidence and spending, which could result in a challenging holiday season for retailers.”

The optimism levels of consumers have diminished not only for the current economic situation but also for what’s to come in the coming months.

“There’s a real sense that people could delay purchases, but at the same time, there are going to be some purchases that just cannot be delayed,” said Jason Reed, a finance professor at the University of Notre Dame. 

“If you think of your wallet share like a pie chart, people are just going to continue to shuffle around what they’re spending on. And some things are going to eat up more of that wallet share -— like food and transportation costs right now — so I could imagine some other discretionary spending declining.”

This story originally appeared on CNN.

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Modern Campground

Modern Campground

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Hi, you might find this article from Modern Campground interesting: Consumer Confidence Plummeted This Month as Inflation Persists! This is the link: https://moderncampground.com/usa/consumer-confidence-plummeted-this-month-as-inflation-persist/