Other data points tracked by the same survey, including current economic conditions and consumer expectations, also fell.
“Consumers’ assessment of their current financial situation relative to a year ago is at its lowest reading since 2013, with 36% of consumers attributing their negative assessment to inflation,” said Joanne Hsu, director of the Surveys of Consumers.
Worse still, Americans consider conditions for buying durable goods, such as furniture or appliances, to be the least favorable since the question was first included on the survey in 1978.
Even so, inflation expectations for the year ahead held at 5.4%, more or less steady with where they have been over the past three months. Long-term inflation expectations also stayed put at 3%, where they have broadly been over the past 10 months.
It’s a tricky time for Americans and making sense of the confluence of economic dynamics of the moment is challenging.
“It is tough to find a silver lining for consumers so far in 2022. Inflation is as bad as it has been in decades,” wrote Tim Quinlan and Sara Cotsakis, economists at Wells Fargo, in a research note. “Rising mortgage rates make housing even less affordable. Gas prices are at an all-time high. Supply chain problems are still making everything from infant formula to household appliances hard to find.”
Prices have been uncomfortably high for long enough to influence consumers’ buying decisions for bigger ticket items. Supply chain issues that are still not resolved have just exacerbated that. The war in Ukraine is weighing on food and gas prices.
Meanwhile, wages are rising, helping to cushion the blow for some households, and savings are still robust, too.