Bidenflation Triggers ‘Stunning’ Collapse of Consumer Sentiment to 10-Year Low
Consumer sentiment plunged in the early weeks of February as consumers lost faith in the Biden administration’s economic policies, inflation rose to the worst level in 40 years, and the long-term economic outlook of American households fell to its least favorable level in a decade.
The University of Michigan’s measure of consumer sentiment crashed to an initial February reading of 61.7, from January’s level of 67.2, the lowest reading since October of 2011.
Economists were expecting a reading of 67, so this was a much bigger decline than anticipated.
“Sentiment continued its downward descent, reaching its worst level in a decade, falling a stunning 8.2 percent from last month and 19.7 percent from last February,” said Richard Curtin, the chief economist of the consumer sentiment survey.
The component of the index that measures consumers’ views of current conditions dropped to 68.5 in February from 72 in January. The gauge of expectations fell to 57.4 from 64.1.
Cratering sentiment has been driven by weakening personal financial prospects, largely due to rising inflation, less confidence in the government’s economic policies, and the least favorable long-term economic outlook in a decade, according to Curtin.
One-third of consumers spontaneously cited the impact of higher inflation on personal finances. Nearly half of all consumers expect declines in their inflation-adjusted incomes during the year ahead.
Twenty-six percent of consumers expect their financial prospects to worsen, the highest level of negative sentiment in four decades.
Curtin said that the decline in the sentiment gauge indicates a sustained downturn in consumer spending.
“The depth of the slump, however, is subject to several caveats that have not been present in prior downturns: the impact of unspent stimulus funds, the partisan distortion of expectations, and the pandemic’s disruption of spending and work patterns,” Curtin said.
Despite the Federal Reserve’s hawkish turn in recent months, near term inflation expectations climbed and longer-term expectations remained stuck at an elevated level. The survey’s one-year inflation expectations rose to 5.0 percent, the highest since 2008, from 4.9 percent in January. The five-to-10-year inflation outlook held steady at 3.1 percent, much higher than the two percent the Fed looks to achieve.
One surprising result in the survey was that Republican consumer sentiment improved a bit in February, although it remains far more negative than Democrat sentiment. Sentiment among consumers who identify as Democrats and political independents grew more pessimistic. Poor government economic policies were cited by 51 percent of consumers, an indication of the collapse of confidence in the Biden administration
Biden: 'I'm Going to Work Like the Devil to Bring Gas Prices Down'
(CNSNews.com) - "Inflation is up. It's up," President Biden told a gathering in Culpeper, Virginia on Thursday, the same day the Bureau of Labor Statistics announced that inflation is running at a 40-year high, led by increases in food, electricity, and shelter.
Biden was in Culpeper to discuss his plan to lower prescription drug prices. But in what he called a "slight digression," he discussed the rising cost of daily living, including gasoline prices.
"And look, the fact is that we're in a situation now where, you know, you should have peace of mind," Biden said.
"I know food prices are up, and we're working to bring them down. As I said, I grew up in a family where a price at the pump went up, you felt it. And I understand."
Then the man who canceled the Keystone XL pipeline and campaigned on a promise to "transition away from the oil industry" said this:
You want to lower the cost of living for people, help them in those areas. So, there's more than one way for a family when it comes to raising their standard of living. I'm going to work like the devil to bring gas prices down, which I'm going to -- working to make sure that we keep strengthening the supply chains to bring the cost of energy and everything else, and the goods that come to America, down by helping the poorest 24-7, by changing a whole range of things.
You know what's happened with COVID? COVID has caused a significant increase in prices in the supply chain, because when a factory shuts down in another part of the world and you need that particular product in order to finish the -- and build whatever you are working on, the price goes up exponentially, like for cars.
But in the meantime, there's a lot we can do to give families extra breathing room.
Here Biden plugged his stalled "Build Back Better" plan, which is going nowhere in the Senate. Yet Biden called it a "law."
"And I might add, and I'd note this law, that this does not raise anyone's -- if you're making less than $400,000, you're not paying a single penny more in taxes, not a single penny more in taxes. And it does not increase the deficit because it's paid for."
Returning to his main topic, Biden said, "bringing down the cost of health care, bringing down the cost of prescription drugs is an easy thing for us to do. It can be done legally with the stroke of a pen."
Earlier in his speech, Biden said something similar:
You know, we're now in a position where we can cap co-pays for insulin at $35 a month. That's still a staggering profit, 3.5 times what it costs to produce the drug. You can do that with the stroke of a -- we can do that with the stroke of a pen.
In my Build Back Better legislation, that with [Rep. Abigail Spanberger's] leadership, passed the House of Representatives, we can do that. Now we just have to get it through the United States Senate, and we're close.
We can do even more to lower out-of-pocket prescription costs. Under my proposal, we will hold drug companies accountable for the absurd price increases. Here's how. Drug companies that increase their prices faster than the rate of inflation once the price is set will face a steep tax. This'll help us end the days when drug companies could increase their prices with no oversight, no accountability, and no responsibility.
We're saying to drug companies, you are finally going to become accountable when you raise prices on the American people, accountability.
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