The November figure was below the projections of economists, who expected an increase to 72.5
American consumer confidence unexpectedly collapsed in early November, with people increasingly concerned about rising prices and the impact on their finances.
The University of Michigan’s preliminary confidence index fell to 71.7 from 66.8 in October, data released Friday showed.
The November figure was below all the projections of economists surveyed by Bloomberg, who expected an increase to 72.5.
The decline in confidence reflects “a rising rate of inflation and the growing belief among consumers that effective policies have not yet been developed to reduce its damage,” Richard Curtin, director of the survey, said in a statement.
“One in four consumers cited inflationary effects on their living standards in November, with lower incomes and older consumers expressing the greatest effect,” Curtin said.
Rising food, gas, and housing costs are eroding consumers’ purchasing power, despite higher wage growth.
About half of all families anticipate declines in inflation-adjusted income next year, according to the data. The sentiment figures add to government data earlier in the week that showed the highest annual inflation in three decades.
While consumers are increasingly distressed by the impact of inflation on purchasing conditions, household spending showed signs of improvement at the end of a weak third quarter.
“Looking ahead, the risk is huge, persistent price increases are fueling the consumer inflation psyche,” Bloomberg economist Eliza Winger said in a note. “In the short term, shortages and prices should curb inflation-adjusted spending.”