US consumer confidence has plunged to its lowest point in over a decade according to the University of Michigan confidence survey. Americans are worried about personal finances, unemployment and inflation.

The decline is attributed to a combination of things including the resurgence of the virus but most especially rising inflation rates. The spike in prices for consumers in July were 5.4 percent higher than in June and the highest 12-month spike since 2008. But rising costs for producers are even more dramatic.  The inflation rate increase of production costs is the biggest on record, at 7.8 percent, year over year.

The survey released on August 13 showed that the consumer index was down from July’s reading of 81.2 to 70.2, a level not seen since 2011. The 13 percent slide was one of the sharpest in the past 50 years, exceeded only by an 18.1 percent drop in 2008 and a 19.4 percent fall in April 2020, when economic constraints imposed because of the virus threw the economy into a tailspin.

The decline in confidence was broad and impacted almost every aspect of the population (age, income, education) and in all regions, according to survey director, Richard Curtin.

A concern of economists is that the consumers’ lack of confidence could mean a drop in how much they spend. Consumer spending is considered by some as a major driver of the economy.

Policies that are flooding the economy with extra cash is in large part the reason for inflation and it has thwarted what had been an unprecedented economic recovery, erasing increased benefits and wages for workers. Inflation is putting pressure on the federal government but the response has been to increase the flood of easy money, with the belief of officials that “the current bout of inflation is transitory” and will improve once the labor market has recovered and become more solid.