COLORADO SPRINGS – Consumer confidence heading into the 2021 holiday season is at a 10-year-low, reaching levels not seen since the Great Recession, according to a recent University of Michigan consumer survey.
“To me, that’s a bit of a red flag when consumer confidence starts to really decline,” economist Tatiana Bailey, Ph.D. said. “If we’re edging down just a bit, I wouldn’t be too worried, but it’s low.”
The survey results have declined sharply since summer. Bailey, the director of the University of Colorado-Colorado Springs Economic Forum, says the inflation in the five to six percent range year-over-year, as well as delays in shipping and the supply chain, are fueling people’s skepticism.
It all adds up to troublesome numbers.
“It’s two thirds of the economy, people being confident and going out and spending money,” Bailey said.
University of Michigan also found an increasing amount of people deciding it’s not a good time to make big purchases, such as homes or cars.
Compare that with the Commerce Department’s report of a 1.7% increase in retail sales in October, and it makes for an interesting economic situation.
“I certainly think that a lot of people started Christmas shopping in September and October, simply because they’re worried about the supply issues,” Bailey said.
Bailey questions whether a rosy retail sales report is justified.
She notes that the report is measured in dollars spent, not the amount of goods purchased, leaving it susceptible to inflation skewing reality.
“Some things have a much higher inflationary pressure than others, that’s going to pull up that total dollar amount without people really having more stuff or necessarily feeling more confident,” Bailey said. “Really they’re just spending more money because of inflation.”