Americans Maintain Their Pessimism That Inflation Will Not Improve Starting In 2022

Consumers are not expecting an easy start to the new year as inflation continues to weigh heavily on their minds and finances.

The University of Michigan released its latest surveys of consumer confidence and expectations on Thursday. In the index for U.S. consumer sentiment, the figure rose to 70.6 in December. Consumers' evaluations of their finances were unchanged from their low levels that were recorded last month.

“Consumers' evaluations of their current finances remained unchanged at lower levels due to the erosion of their living standards from rising inflation,” said Richard Curtin, the chief economist for the survey of consumers by the University of Michigan. “One in four households specifically cited the negative impact of inflation on their living standards.”

Core inflation jumped in the most recent measurement of personal consumption expenditures — an important barometer for wider inflation in the U.S. economy. While it rose 0.6% between October and November, it saw an increase of 5.7% over the last year, the highest since 1982.

This hike in inflation was reflected in consumers’ assessment of their current economic conditions and future expectations for 2022.

Their sense that current economic circumstances have worsened went up in the last year 17.6% as it changed by 0.8% from November.

Inflation has emerged as the defining issue for policymakers at the White House and Federal Reserve. Prices continue their ascent amid choked supply chains on top of trillions of dollars in government spending to fight the COVID-19 pandemic.

President Joe Biden has established partnerships at home and abroad to unwind the supply chain bottlenecks that have driven up prices. The White House also announced the formation of a Supply Chain Disruption Task Force in July to coordinate efforts to bring prices down and deliver goods to market.

On Dec. 15, the Federal Reserve announced that it would be tapering its multibillion-dollar asset purchase program. It also declared that it expects to initiate three interest-rate hikes in 2022, a year ahead of previous projections.