Inflation sours consumer attitudes

The U.S. economy is lousy with inflation, and that is putting consumers in a sour mood.

The latest University of Michigan Surveys of Consumers, released on March 25, found that consumer sentiment declined in March because of falling inflation-adjusted incomes, accelerated by rising fuel prices.

The year-ahead expected inflation rate rose to its highest level since 1981, according to the survey, and expected gas prices posted their largest monthly upward surge in decades. Personal finances were expected to worsen in the year ahead, consumers indicated.

“Just when difficult decisions need to be made about monetary and fiscal policies, consumers have expressed loss in confidence in government economic policies,” University of Michigan economist Richard Curtin, director of the surveys, said in a news release.

“Moreover, most consumers are uncertain about the ultimate impact Putin’s war will have on their personal economic situation."

Methods to fight inflation often mean slower growth and increasing unemployment, he noted in the release.

"Any resulting slowdown is likely to be met with demands for subsidies by households and firms similar to what they received during the pandemic," he said in the release. "This makes the policy challenge more difficult, even if a soft-landing could be achieved. While consumer solidarity about policy choices is unrealistic, the widespread partisan divisions may stifle policy compromises and promote less favorable outcomes for all.”

The Michigan Surveys of Consumers reported that the Consumer Sentiment Index fell to 59.4 in the March 2022 survey, down from 62.8 in February and 84.9 last March, a 30% drop compared with a year ago. The Expectations Index fell to 54.3 in March, down from 59.4 in February and 31.9% from last year. The Current Conditions Index fell to 67.2 in March, down from 68.2 in February and 27.7% from last year.

How much is inflation showing up in fob and terminal market prices for fresh produce? Check out the charts below for some visual storytelling on that issue.