Consumer confidence drops as inflation squeezes US shoppers

Bloomberg

Rising prices in the US are starting to weigh on consumer spending.
Two-thirds of US consumers say they are planning to reduce spending over the next six months as a result of inflation, according to a recent survey of roughly 2,000 people conducted this month by Morgan Stanley. A similar percentage identify inflation as a top concern.
The number of people who said they intend to engage in leisure and entertainment has slowed from a rise of 7% earlier this month to a modest hike of 2%, while visits to shopping malls have dropped 14% and travel intentions are starting to cool. Households with incomes of more than $150,000 “are resilient in their travel intentions thus far,” the researchers said.
Consumer spending soared in recent cycles as households accumulated savings and enjoyed lower debt levels. Now, high inflation and slow increases in
jobless claims seem to be exhausting consumers.
“Wages are not keeping up with inflation… it’s becoming increasingly challenging for households to pay their bills. People are starting to change their behaviour in unusual ways in order to stretch their dollars a little long further,” Chris Low, chief economist at FHN Financial, said.
Consumption of gasoline — a usually inelastic good — declined in real terms by nearly 8% in July, according to FHN Financial’s calculations.
“You can tell how squeezed families are by the fact that they are changing their driving habits so much,” Low said.