US consumer sentiment falls on Omicron, inflation woes
US consumer sentiment deteriorated in January to its lowest level in more than a decade amid worries about Omicron and inflation, according to a survey from the University of Michigan.
The Michigan sentiment index fell to 67.2 from 70.6 in December and 79.0 on January 2021. The index of current economic conditions printed at 72.0 in January, down from 74.2 the month before and 86.7 in the same month a year prior.
Meanwhile, the gauge for consumer expectations came in at 64.1 versus 68.3 the month before and 74.0 in January last year.
Surveys of Consumers chief economist Richard Curtin said sentiment had fallen to its lowest level since November 2011.
"The current slump was due to two sharp declines separated by a brief interlude of rising optimism. The initial steep decline occurred in just two months, a 28.9% plunge in optimism from February to April 2020 due to the shutdown in the economy," he said.
"Confidence recorded an equally strong recovery beginning in late-2020, rising 23.0% by April 2021. That upturn was reversed during the past nine months, with the sentiment index falling by 23.9%. The Delta and Omicron variants were largely responsible, but other factors, some of which were initially triggered by Covid, have become independent forces shaping sentiment.
"While supply chains and essential workers have sparked the initial increases in prices and wages, a wage-price spiral that has subsequently developed is no longer tied to those precipitating conditions. Household spending had been supported by an extraordinary pace of rising home and stock prices that is likely to turn negative in the year ahead."