Report: Consumer optimism at its lowest level in decade

Inflationary concerns and a lack of government policies to address those challenges are driving consumer optimism to its lowest level in at least a decade, according to November's University of Michigan Survey of Consumers. .The report comes as year-over-year inflation remains high, rising at a 6.2 percent clip in October, the largest 12-month increase since November 1990. One-in-four consumers reported inflationary erosion of their living standards last month. Inflation, seen as mainly being caused by supply-line shortages, increased and spread across the economy.."Rather than gradually easing along with diminished shortages, complaints about falling living standards doubled in the past six months and quintupled in the past year," the report stated. Though the Federal Reserve has described inflation as "tertiary" and driven by the pandemic, some economists say inflation could continue increasing for the foreseeable future, possibly leading to lower consumer spending. Long-term inflation expectations increased by a half-percent in the past year, to 3 percent in November. .Despite the inflation, consumers expressed a strong desire to resume more normal holiday get-togethers with friends and family and use any accumulated savings to fund celebrations and gifts. According to the report, price and wage inflation "will continue uninterrupted," once the holiday season ends in January. President Joe Biden's social infrastructure legislative package, once implemented, is not expected to immediately lessen inflation nor wage growth. Prolonged inflation is expected to bring more urgency to expand government relief payments to ease the impact of job losses and cover inflationary declines in living standards. Another pressing concern is the nearly 6 percent inflationary adjustment in Social Security payments that will begin in January. ."The real transient issue is the rapidly closing window when effective policy actions can be accomplished by very modest nudges in interest rates and regulations," the report states. "At present, consumers still expect inflation to revert to a much lower level over the next five years, but that anchor has begun to yield ground."