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Consumer sentiment lifted for the second straight month in January, rising 9% above December but remaining about 3% below a year ago, according to the University of Michigan Surveys of Consumers.
Easing inflation and strong incomes provided welcome support to the personal finances of American consumers and buoyed their views of current economic conditions, said U-M economist Joanne Hsu, director of the surveys.
However, the short-run economic outlook fell modestly from December, with two-thirds of consumers expecting an economic downturn in the year ahead, she said. In contrast, the long-run outlook rose 10% to its strongest level in nine months, though it remains 15% below its historical average.
“Slowing inflation provides some much-needed upward momentum for consumer sentiment. However, global factors like the end of China’s ‘zero-COVID’ policies may put additional upward pressure on inflation,” Hsu said. “Furthermore, the debt ceiling debate looms ahead and could reverse the improvement in sentiment seen over the last several months; past debt ceiling crises in 2011 and 2013 prompted steep declines in consumer confidence.”
Consumers expect further slowdown in inflation
The recent easing of inflation boosted consumer attitudes, and consumer assessments of their personal finances surged 19% to its highest reading in eight months. A still-sizable 36% of consumers reported that their living standards are being eroded by inflation, the lowest share since April 2022.
Consumers voiced fewer concerns over gas and food prices in January, and a declining share of consumers blamed high prices for poor buying conditions for durable goods, cars, as well as homes. However, concerns over inflation remain substantially higher than a year and a half ago prior…
2023-01-27 13:37:57 Growing borrowing costs offset easing inflation, finds consumer survey
Article from phys.org According to the latest consumer survey, increasing borrowing costs are nullifying the effects of slowing inflation. The survey, which was conducted by a research firm, asked over 2,000 people about their perceptions about the current economic state.
The majority of respondents said that the rising prices of debt were counteracting the lowering inflation that is partly attributed to the decrease in fuel prices. In addition, most of the respondents felt that borrowing costs were the main factor that was causing them the most financial difficulty.
The survey also found that a large percentage of those surveyed were having trouble keeping up with their monthly payments. This is due in part to the higher borrowing costs which have been on the rise over the past few months. This has put extra strain on many households who are already struggling to stay above the poverty line.
The consumer survey also highlighted that the majority of those surveyed were not taking advantage of the various tax relief programs and incentives that are available to assist with rising costs. Additionally, there was little knowledge about programs that are available to those who are facing debt troubles.
The findings from the survey highlights the need for people to be more aware of their situation and the options that are available to them. It is also important to note that despite the economic slowdown, people are still having to deal with increasing borrowing costs.
It is essential that people are educated on the different ways they can manage their debt and make sure they do not fall further behind. Taking advantage of the various government and private programs that are designed to assist with debt relief could go a long way towards alleviating the financial pressure many people are facing.