US Consumer Sentiment Falls to Lowest Level in 8 Months: Survey

People shop at a grocery store in Columbia, Md., on June 8, 2024. (Madalina Vasiliu/The Epoch Times)

Consumer sentiment declined to the lowest level since December 2023 as American citizens continue to be troubled by high prices from elevated inflation, according to a recent survey.

The Index of Consumer Sentiment declined by 3.2 percent this month from June, according to a July 12 data release by the University of Michigan’s Surveys of Consumers.

The index fell by 7.7 percent from a year back. Consumer sentiment is now at the lowest level since December 2023 and is the third lowest over the past 12 months.

Consumer sentiment continues to remain “stubbornly subdued,” said Joanne Hsu, director of consumer surveys.

“Nearly half of consumers still object to the impact of high prices, even as they expect inflation to continue moderating in the years ahead,” she said.

The decline in consumer sentiment comes as inflation has remained elevated for over a year. The 12-month inflation rate has consistently remained at or above the three percent level since June 2023, putting extended pressure on household budgets.

The average price of a dozen eggs has risen by 85 percent since January 2020, while the price of whole chicken rose 42 percent and a pound of bread jumped by almost 46 percent.

Elevated inflation is also delaying interest rate cuts. Federal Reserve Chair Jerome Powell recently told lawmakers that inflation needs to come down more before the agency can start reducing interest rates.

“After a lack of progress toward our 2 percent inflation objective in the early part of this year, the most recent monthly readings have shown modest further progress,” he said. “More good data would strengthen our confidence that inflation is moving sustainably toward 2 percent.”

Interest rates are currently in a range of between 5.25 and 5.5 percent. Mr. Powell expressed worries that reversing the current tight monetary policy “too late or too little could unduly weaken economic activity and employment.”

Meanwhile, consumers expressed mixed feelings about the state of the economy and their expectations in the Conference Board’s Consumer Confidence survey in June.

“Their view of the present situation improved slightly overall, driven by an uptick in sentiment about the current labor market, but their assessment of current business conditions cooled,” Dana Peterson, chief economist at The Conference Board, said in a statement.

“For the second month in a row, consumers were a bit less pessimistic about future labor market conditions. However, their expectations for both future income and business conditions weakened.”

Americans Burdened by Inflation

President Biden recently released a statement defending his policies after the June data showed inflation easing from the previous month.

“Prices are falling for cars, appliances, and airfares, and grocery prices have fallen since the beginning of the year. Thanks to my economic plan, wages are rising faster than prices, we’ve created 15.7 million jobs, and communities that were left behind by my predecessor are making ‘a remarkable comeback,’” he said.

The president called on big corporations making “record profits” to do more to lower prices.

In a recently released fact sheet, the U.S. Joint Economic Committee Democrats said that national average wages and salaries have grown by almost $16,700 since 2021 under the Biden administration, outpacing inflationary price growth during that period by nearly $3,800.

Despite these claims, inflation was cited as the top financial issue by Americans in a May Gallup poll. Forty-one percent called it the “most important financial problem” facing their families, up from 35 percent a year back.

More than a quarter of Americans are now skipping meals due to high grocery costs, said a May survey by Credit Karma, while another recent poll indicated nearly eight in 10 Americans blame inflation for making it harder to pay medical bills.

“While we’re seeing early signs of inflation relief for food, Americans are still facing rising costs for other necessities such as rent and gasoline, which could be counteracting their journey toward financial stability,” said Courtney Alev, consumer financial advocate at Credit Karma.