Inflationary fears are a risk for US consumption.

The recent increase in inflation runs the risk of taking a toll on the accelerated growth in spending that has fueled the economic recovery of USA during the pandemic, at least in the short term.

That’s the conclusion some economists came to from the unexpected drop in consumer confidence released on Friday, driven mainly by fears about rising prices. A drop in early November may herald a moderation in consumption in the coming months.

“In the short term, shortages and prices should constrain inflation-adjusted spending,” Bloomberg economist Eliza Winger said in a note. “Going forward, the risk is enormous, persistent price increases are internalized in consumers’ mentality about inflation.”

The University of Michigan confidence measure declined this month beyond all forecasts. And the report showed that purchasing conditions for household items also deteriorated dramatically, falling to the second-lowest reading in data compiled since 1978.

One in four respondents said inflation had lowered their living standards, and more consumers noticed a rise in the prices of homes, vehicles and durable goods. That’s a notable change from the previous month, when one in five mentioned a decline in living standards.

Research published in early October argued that declining consumer expectations suggests the economy is in recession, even if job and wage growth indicate otherwise.

While wages are rising at a record pace as companies scramble to attract new employees, inflation is eroding purchasing power.

Still, many American households remain awash in cash from savings accumulated during the pandemic. Even as pandemic aid expired and prices are rising, there is a lot of pent-up demand ahead of the holiday season, especially from higher-income families.

“We would be surprised if this drop in confidence is followed by moderation in spending, which is ultimately what matters,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a note.