High borrowing costs and persistent worries about inflation are beginning to drag more heavi🤪ly on consumers’ optimism over the economy, as consumer se🍎ntiment survey results fell for the fourth-consecutive month. 

The Michigan Index of Consumer Sentiment preliminary November reading of 60.4 was lower than the 63.7 survey result that economists expected to see and a sharp drop from the 澳洲幸运5官方开奖结果体彩网:63.8 reading for October.

The steep decline in sentiment was spurred by growing concerns about the negative impact that high interest rates are having, as consumers’ long-run economic outlook fell 12%, despite reporting imp𝕴rovement in both their current and expected finances. 

“Overall, lower-income consumers and𒀰 younger consumers exhibited the strongest declines in sentiment,” wrote Joanne Hsu, director of the University of Michigan’s survey of consumers.

The closely-watched survey comes as Federal Reserve Chair Jerome Powell said that interest rates could need to be 澳洲幸运5官方开奖结果体彩网:raised even further to combat inflation. The current federal funds interest rate is at a 22-year high at 5.25% to 5.5%, which has pushed rates higher for other loans, like mortgage rates that are 澳洲幸运5官方开奖结果体彩网:currently around 7.9%, just lower than ♐30-ye💃ar high rates hit in October.  

The monthly survey also showed that consumers’ view of current economic conditions dropped almost 7% to 65.7 in November, down from October’s 70.6, while the ♌index of consumer expectations declined 4% to 56.9 from 59.3. 

Consumers Fear Inflation to Grow Worse

Inflati🌞on worries worsened, the survey showed, as consumers’ year-ahead inflation expectations moved to 4.4%, up from October’s reading of 4.2%. The higher figure shows that the jump from September’s 3.2% year-ahead inflation expectations were genuine, with the current reading being the ꧂highest since November 2022. In the two years before the pandemic, year-ahead inflation expectations ranged from 2.3% to 3.0%.

Long-run inflation expectations reached their highest levels since 2011, as consumers expect inflation five-years-out to reach 3.2%, higher than October’s 3.0%. For both the short- and long-term, gas price expectations are driving consumer worries over inflation, Hsu wrote.