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U.S. consumer confidence in the government’s economic policies decreased

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In January, U.S. consumer confidence and sentiment dipped.

As expected in December, U.S. consumer confidence did decline in January. Consumers are facing hard times, and their confidence in a fast and rapid economic recovery is eroding each day. Now, experts agree that improving the consumer confidence index will be a challenging test for the Federal Reserve. Considering key metrics that are currently controlling and affecting the macroeconomics of the U.S. and the globe as well, 

According to January’s consumer confidence index, inflation is rising at a fast pace at home and abroad. Energy prices and food prices are also on the climb. 

The Conference Board released a report on Thursday and noted that the average American consumer’s buying power dipped this month. Compared to last December, when the index improved and gave some relief to the market, the December consumer confidence index was 115.2 points, but since then it dipped by 1.7 points to 113.8 points in January. There are far more serious problems that the nation is facing now than whether these indexes came at the wrong time or the perfect time. It all depends on the Federal Reserve’s reaction to the index.

Plus, the University of Michigan’s consumer sentiment also dipped to 68.8 points as of January. Economists believe that this rate is the lowest in a decade. This is much similar to the index of the last financial crisis of 2008. Major investors and Wall Street experts are concerned that the United States may face a repeat of that scenario.

U.S consumers’ confidence in the government’s economic policies decreased.

Following the release of the Conference Board report, the bureau senior director said that indexes are improving. He also noted that the U.S. economy is showing signs of improvement and that it will start this year on solid footing. Yet, the problem remains the same: consumers are losing hope in terms of short-term economic growth. With all that’s going on: hikes in unemployment rates, hikes in prices, and inflation surges,

The January mortgage rate increased to an alarming level. Automobile prices, homes, and goods and services still suffer from inflation surges. Add to that the fast-sparing Omicron variant. The U.S. is recording at least 640.000 new Omicron cases daily. That’s positive news compared to the last three months of 2021. The senior director of the Conference Board forecasts that the consumer index will improve in the first half of 2022. He also added and claimed that the health crisis is the reason why consumer confidence decreased this month in the U.S.

Let’s address the elephant in the room: inflation is at its highest level since 1982. On the other hand, U.S. consumer confidence in the government’s economic policies is at its lowest level since 2014. The Federal Reserve will implement its policies this week or the next as planned. This might boost businesses’ ability to get back on track and encourage consumer sentiment and confidence in government capabilities. 

The University of Michigan forecasts that inflation will increase by 4.9% in both 2022 and the next five years. As it seems, inflation is not a short-term surge; it will last for a long time. Goldman Sachs already noted that, and he also predicted that the Federal Reserve might add new hikes to interest rates and reduce its bond purchasing power. For now, these are only assumptions and forecasts; it’s too early to measure the true damage of inflation hikes on the global economy, including the U.S.

Written by Editor

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