Americans’ inflation outlook held steady in August, even as actual price increases continue to slow, according to the Federal Reserve Bank of New York’s latest Survey of Consumer Expectations. This comes as the Federal Reserve is expected to cut interest rates soon.
The survey shows that people expect inflation to be 3% a year from now and 2.8% five years from now, unchanged from July. The three-year inflation outlook rose slightly to 2.5% from 2.3%. These numbers suggest that while inflation fears aren’t growing, they’re not fading as quickly as the Harris-Walz campaign would hope.
The survey also looked at other parts of the economy. Expectations for house price increases went up a bit to 3.1% in August from 3% in July. This might show a little more confidence in the housing market, though it’s a small change.
People expect higher prices for gas, rent, and medical care. However, they think food and college costs won’t go up as fast. This mixed picture shows that inflation worries aren’t the same across all parts of the economy.
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The job market outlook is also sending mixed signals. People expect higher income and earnings, which is good news. But there’s a worrying trend too. More people think they might miss a debt payment. This number has been going up for three months and is now at its highest since April 2020, when the COVID-19 pandemic was just starting.
The survey also found that fewer people feel they’re better off financially than a year ago, and more say they’re worse off. Looking ahead, more people expect their money situation to get worse in the coming year.
This is New York Fed’s Survey of Consumer inflation expectations. Still not back to where it was in the years before COVID. The embers of inflation are still there. If the Fed lets the money supply accelerate from here…the fire could start up again. Inflation is not dead. pic.twitter.com/GkBkxXyr3g
— Brian Wesbury (@wesbury) September 9, 2024
All this information comes as the Federal Reserve gets ready for its next meeting. With inflation cooling down and job market risks going up, most experts think the Fed will cut interest rates. The current rate is between 5.25% and 5.50%.
Recent weak hiring data for August has put more pressure on the Fed. Some think they’ll cut rates by a quarter point, while others expect a half-point cut. Either way, most market watchers believe this will be the start of several rate cuts.
Right now, it seems Americans are cautiously watching and waiting when it comes to inflation. They’re not panicking, but they’re not ready to say the problem is solved either which will have a big influence in the upcoming presidential election.
