Consumer Sentiment Falls to 10-Year Low in November
November 12, 2021
Amid inflation climbing at the fastest pace in more than 30 years, consumer confidence has fallen to the lowest point in a decade.
The University of Michigan’s Consumer Sentiment Index dropped to 66.8 for November, down 6.8% from October’s reading of 71.1. Economists polled by Dow Jones had expected a modest increase to 72.5.
The survey also showed that consumers expect prices to keep climbing, with the 12-month inflation expectation forecast edging up to 4.9%. One-quarter of the respondents said that they have reduced their standard of living in the face of higher prices, and half said they expect their real income to be lower in the coming year when adjusted for inflation.
While consumers reported little confidence in the state of the economy, a separate report suggests high confidence in the labor market. The Labor Department reported that 4.4 million people quit their jobs in September. That beats the previous record of 4.27 million set in August.
A high “quit rate” is historically seen as a sign of economic confidence, as workers rarely leave their job voluntarily unless they are sure they can secure a better job elsewhere. The quit rate has been elevated since the post-pandemic recovery began, as millions of workers who grew accustomed to working from home or were forced to reconsider their childcare needs and work-life balance during the pandemic are reconsidering their career plans, a trend that has been dubbed “The Great Resignation.” Now. as prices continue to climb, workers have added incentive to look for higher-paying work elsewhere.