Consumer sentiment went down in the early weeks of February as consumers lost faith in the economic policies of the Biden administration. Inflation during Biden’s term — “Bidenflation” for short — soared to the worst level in four decades and the long-term economic view of American households dropped to its least favorable level in 10 years.

The University of Michigan‘s measure of consumer sentiment sank to a basic initial February reading of 61.7 percent, from January’s level of 67.2 – the lowest reading since October 2011. Economists were anticipating a reading of 67 percent.

“Sentiment continued its downward descent, reaching its worst level in a decade, falling a stunning 8.2 percent from last month and 19.7 percent from last February,” said Richard Curtin, the chief economist of the consumer sentiment survey.

The part of the index that measures consumers’ views of present conditions fell to 68.5 percent in February from 72 in January. The measure of expectations dropped to 57.4 from 64.1 percent.

According to Curtin, the falling sentiment has been directed by failing personal financial expectations, mostly due to soaring inflation, little confidence in the government’s economic policies and the least favorable long-term economic forecast in 10 years. 

One-third of consumers immediately noted the impact of higher inflation on personal finances. Almost half of all consumers anticipate downturns in their inflation-adjusted incomes during the coming year.

Twenty-six percent of consumers await their financial expectations to worsen, the highest level of negative sentiment in 40 years.

Curtin said the drop in the sentiment measure indicates a sustained decline in consumer spending.

“The depth of the slump, however, is subject to several caveats that have not been present in prior downturns: the impact of unspent stimulus funds, the partisan distortion of expectations and the pandemic’s disruption of spending and work patterns,” added Curtin.

Despite the Federal Reserve’s aggressive change in recent months, near-term inflation forecasts climbed and longer-term forecasts stayed at an inflated level. The survey’s one-year inflation expectations jumped to 5.0 percent, the highest since 2008, from 4.9 percent in January. The five-to-10-year inflation outlook remained stable at 3.1 percent, which was much higher than the two percent the Fed wanted to reach.

A surprising result in the survey was that Republican consumer sentiment improved a little in February even though it stayed far more negative than Democrat sentiment. Sentiment among consumers recognized as Democrats and political independents turned more pessimistic. Poor government economic policies were mentioned by 51 percent of consumers, an indication of the downfall of confidence in the Biden administration.

Biden administration inflation tax costs American families $5,000 per year

Meanwhile, a report published last month revealed that inflation under the Biden administration is costing American families an average of $5,000 per year.

A report by the Washington Examiner stated that West Virginia Sen. Joe Manchin was correct to declare his concerns about inflation that is crushing the nation’s families worse than any time in the past four decades. According to the report, the $5,000 “Bidenflation tax” was based on two recent studies.

“A new analysis by the Penn Wharton Budget Model found inflation costs the average U.S. household $3,500 in higher prices. The analysis showed that ‘inflation requires the average U.S. household to spend around $3,500 more to achieve the same level of consumption of goods and services as in previous years,'” Bruce Thompson wrote in the report.

The same study also found that lower-income families were hit much more.

Also resulting in higher taxes was the second part of the inflation tax which was based on inflation that spurred taxpayers into higher tax brackets. According to a current Congressional Budget Office report “a 1 percent increase in inflation would increase individual income taxes by 1.1 percent.”

The two factors merge for a huge added stress on American household finances.

“At today’s 6.8 percent inflation rate, this translates into a 7.5 percent tax increase, a $1,500 tax increase for a household earning the median family income. With $3,500 in lost purchasing power and $1,500 in higher taxes, this painful Biden inflation tax is costing the typical family $5,000 a year,” Thompson added.

Democrats’ reckless tax-and-spend bill means higher taxes

Idaho Sen. Mike Crapo, a U.S. Senate Finance Committee ranking member, pronounced in a December statement that American households can expect even higher taxes if the reckless tax-and-spend bill of Democrats is passed.

“Americans have been extremely clear that inflation and rising costs are their top concerns right now. Inflation is now at 6.8 percent, reaching a near 40-year high. The producer price index is up 9.6 percent, the fastest pace on record,” Crapo said.

“This analysis is telling us that even without the Democrats’ reckless tax-and-spend legislation, lower-income households will experience a $3,500 stealth tax. If Democrats push forward with their bill, which is front-loaded with inflationary spending and full of job-killing tax hikes, Americans can expect to pay even more to keep up with rising costs without getting ahead.”

Freedom Works economist Stephen Moore, in an op-ed, featured the concern in dialogues responding to Biden’s speech after the December jobs reports.

“While the president was boasting of wage gains for bartenders, kitchen help and waitresses, he ignored an inconvenient truth: for six straight months now, prices have been rising faster than wages. Wages are up on average by about 4.6 percent this past year, but price inflation is up more than six percent,” Moore said.

In a related Twitter post, Freedom Works said: “Most low/moderate-income workers are suffering a DECLINE in the purchasing power of their paychecks. The Biden Inflation Tax is a direct result of all the debt spending that is pouring like an uncapped fire hose into the economy.”

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