Why are people so glum about the economy?
There are plenty of jobs on offer in this economy for folks who are looking to get back to work. Or those who are ready to tell the boss, “I quit,” and take a new one.
But, in the not-so-good-news department, this week we got that spike in consumer prices — inflation at 6.2% year over year. That’s a level we haven’t seen since the early 1990s.
More not-so-good news was delivered Friday, this time from the University of Michigan. Consumer sentiment fell in early November to a 10-year low.
Incomes are up, and layoffs are down. Prices are up, and confidence is down.
“There is this weird push-pull, people being like, ‘Oh no, I’m great, but everything’s terrible,” said Chris Jackson at the polling firm Ipsos. “Consumers’ personal situations are actually pretty good, but their views of the bigger economy continue to be sort of dire.”
And the price increases are kind of dire — affecting everything from gas and groceries to rent and utility bills.
The latest consumer sentiment survey shows it, per Bankrate’s Mark Hamrick: “One in 4 consumers cited inflation-related reductions in their living standards.”
Many people have received raises; average hourly earnings are up about 5% in the last year. But prices are up even more.
In spite of their rather gloomy outlook, consumers are on a shopping spree, according to Mark Cohen at Columbia Business School.
“Folks are coming out to shop for things they haven’t had any use for because they’re getting out and about,” Cohen said. “Folks are going back to work, they are buying gasoline. They are frustrated by the fact they can’t find a new car.”
But they want a new car, or clothes, and gifts for the holidays. In fact, that strong demand is one big reason supply chains are messed up and prices are soaring.
Behind all that, “COVID is still the 800-pound gorilla in the room, very much the key player in the economy right now,” said economist Robert Frick at Navy Federal Credit Union. “It’s certainly going to dog us through this winter.”
COVID is still keeping many people out of the workforce and out of stores and restaurants … and worried about what’ll happen to their jobs if the pandemic gets bad again.
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