News US Economy News Inflation Deflates Consumers, Despite Other Positives Off the Charts: The Visual Says It All By Diccon Hyatt Diccon Hyatt Diccon Hyatt has written hundreds of articles about how public policy and the economy intersect with personal finance, tracking all the latest dynamics affecting your money. Before joining The Balance, he covered business and community news for 17 years, including Princeton, New Jersey's high-tech Route 1 Corridor. learn about our editorial policies Published on November 12, 2021 Fact checked by Heather van der Hoop Fact checked by Heather van der Hoop Website Heather van der Hoop (she/her) has been editing since 2010. She has edited thousands of personal finance articles on everything from what happens to debt when you die to the intricacies of down-payment assistance programs. Her work has appeared on The Penny Hoarder, NerdWallet, and more. learn about our editorial policies Share Tweet Pin Email Photo: Maskot BildbyrÃ¥ / Getty Images The stock market is booming, pandemic restrictions are easing, jobs are plentiful, and employers are giving raises galore—yet U.S. consumers are feeling more downbeat about the economy and finances than they have in a decade, new data from a widely watched poll shows. Apparently inflation is overshadowing all the good news. The University of Michigan’s Index of Consumer Sentiment fell again in early November and is now at its lowest point since November 2011, data released Friday showed. Each month the index measures consumers’ feelings about their own finances and the broader economy—both current and future prospects—using a minimum of 500 phone interviews statistically designed to be representative of all American households. As the chart below shows, they weren’t this gloomy even during the depths of the pandemic. The U.S. inflation rate jumped to 6.2% in October, the highest in 31 years. While many respondents in the latest University of Michigan poll reported income gains, half of all families interviewed didn’t think they would come out ahead once soaring inflation was taken into account. One in four consumers cited inflation-related declines in their living standards in November, and the problem was particularly acute among older people and those with lower incomes. “Inflation has clearly gripped the public imagination in a way not seen in decades,” said Douglas Porter, chief economist at BMO Capital Markets, in a commentary. Changes in people’s attitudes about their financial situation affect their spending behavior and, in turn, can signal changes in the direction of the economy. That’s why policymakers use indexes including the University of Michigan’s as a barometer of economic activity. Have a question, comment, or story to share? You can reach Diccon at firstname.lastname@example.org. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. University of Michigan. “Surveys of Consumers: Preliminary Results for November 2021.” University of Michigan. “Surveys of Consumers: Index Calculations, Index of Consumer Sentiment.” Accessed Nov. 12, 2021.