Consumer Sentiment from the University of Michigan fell further below its pandemic lows this month as inflation concerns continue to mount. Inflation expectations for the next 12 months returned to its post-pandemic high of 4.9% to start 2022, and these expectations could remain at an extended level given that the University of Michigan sees the onset of a wage-price spiral: “While supply chains and essential workers have sparked the initial increases in prices and wages, a wage-price spiral that has subsequently developed is no longer tied to those precipitating conditions.” Bottom line, consumer attitudes are at the most depressed level in over 10 years, and the unmistakable reason is inflation.
