U.S. citizens are expecting prices to keep rising and are worried about the economy deteriorating further, according to the latest Surveys of Consumers by the University of Michigan.
The median expected year-ahead inflation rose to 5.1 percent in October from 4.7 percent in September, according to the preliminary survey results report. The view that inflation would rise was consistent across income, age, and education groups.
In September, long-run inflation expectations had fallen between the 2.9 percent and 3.1 percent range for the first time since July 2021. However, expectations returned to that range in October at 2.9 percent. Short- and long-run expectations regarding gas prices also rebounded.
Most survey participants were not enthusiastic about the prospects of the American economy. The Current Economic Conditions index declined by 16 percent year-over-year in October while the Index of Consumer Expectations fell by 17.2 percent during this period. The Index of Consumer Sentiment is down 16.6 percent.
“Sentiment is now 9.8 points above the all-time low reached in June, but this improvement remains tentative, as the expectations index declined by 3 percent from last month. Continued uncertainty over the future trajectory of prices, economies, and financial markets around the world indicate a bumpy road ahead for consumers,” survey director Joanne Hsu stated in the report.
An Oct. 11 report by the New York Fed detailing results of the September Survey of Consumer Expectations made similar findings about long-term inflation.
The three-year-ahead inflation expectations rose to 2.9 percent in September from 2.8 percent in August. Median five-year-ahead inflation expectations rose by 0.2 percent to 2.2 percent.
Political Repercussions
The 12-month Consumer Price Index (CPI), which measures annual inflation, came in at 8.2 percent in September according to data from the U.S. Bureau of Labor Statistics (BLS). In January 2021 when Biden assumed office, the CPI was only 1.4 percent.
The uncontrolled rise in inflation is posing a threat to the Democrat-controlled Congress ahead of the midterm elections in November. In a recent speech to supporters in Los Angeles, Biden insisted that inflation is “going to get worse” if Republicans win the midterms.
However, multiple polls have shown that Americans are growing wary of the Biden administration’s ability to handle the economy.
A poll by The Associated Press and NORC Center for Public Affairs Research in September found that only 38 percent of respondents approved of Biden’s economic leadership, with 71 percent saying that the economy was doing poorly.
“The president is in denial that America is experiencing a dangerous wage-price spiral that will drive high inflation for years, that we are in stagflation, and that we are either in, or on the verge of, a harsh recession—all that he created by bungling the recovery,” Rep. Kevin Brady (R-Texas), the top Republican on the tax-writing House Ways and Means Committee, told The Associated Press.
A recent poll by CNN found that voters in competitive congressional districts have a preference for Republican candidates.
Democrat supporters were found to be more apprehensive about their party’s ability to solve problems. While 71 percent of Republicans said GOP candidates have a plan to solve the issues facing the nation, only 59 percent of Democrats said the same about their nominees.
From The Epoch Times