US consumer confidence fell to a 10-year low in November, reflecting heightened concerns among Americans about unexpectedly high inflation and rising prices for everyday goods.

The University of Michigan’s consumer sentiment index fell to 66.8 in November – a sharp drop from its October level of 71.7 and well below economists’ forecasts of 72.4.

“Consumer sentiment fell to its lowest level in a decade in early November due to escalating inflation and growing consumer belief that no effective measures have been developed to reduce the damage caused by rising inflation,” said Richard Curtin, chief economist for the survey said in a statement.

THE US WILL GO INTO ANOTHER RECESSION IF THE TREND OF CONSUMER OPINION CONTINUES, ECONOMICS SAY

The survey found that one in four consumers has reduced their standard of living due to higher prices, and more than half of families expect their real income to fall in the coming year, adjusted for inflation.

“Rising prices for homes, vehicles and consumer goods have been reported more frequently than ever in more than half a century,” added Curtin.

The latest consumer sentiment readings came after the government reported last week that US consumer prices rose 6.2% year over year in October. So-called core prices, which exclude the more volatile measurements of energy and food, rose 4.6% last year. Both are the strongest increases since 1990. From September to October prices rose by 0.9%.

Rising inflation is eating away at the strong gains and wages American workers have achieved in recent months (the average hourly wage in the US is even down 1.2% in the last month compared to October 2020 if inflation is taken into account ).

The worse-than-expected rate recently could anticipate an imminent recession research published last week by David Blanchflower of Dartmouth College and Alex Bryson of University College London. The October study suggests that the Conference Board and University of Michigan consumer expectation indexes predict economic downturns in the US up to 18 months in advance

Every recession since the 1980s has been triggered by a drop in expectation indices by at least 10 points, they found. Other reliable indicators include a single monthly increase in unemployment of at least 0.3 percentage points and two consecutive months of a decrease in the employment rate.

The “clear downward moves in consumer expectations” over the past six months are evidence that the US is headed for a recession, the economists said. While this is not reflected in the hiring situation – the unemployment rate is falling and the economy is building jobs, albeit at a slower pace than expected – it is likely because the US government has played a major role in supporting the labor market.

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“It seems to us that there is a good chance the US will fall into recession in late 2021,” they wrote.