US Consumer Morale Paints a Bleak Economic Outlook Amid Fears of Recession

In a recent survey by the Federal Reserve Bank of New York, most respondents anticipated that inflation would rise in the upcoming year, highlighting the grave anxiety of American consumers regarding inflation.

Despite the aggressive efforts of the U.S. Federal Reserve to reduce inflation, respondents anticipated a 0.5% increase in inflation over the next year, equivalent to a 4.7% annual increase.

This contradicts Fed officials’ forecasts that inflation will decline due to a series of rate hikes.

Beyond Inflation

The concerns of consumers extend beyond inflation. The NY Fed survey revealed that 58.2% of survey participants find it much or somewhat more difficult to obtain credit, the greatest percentage since the survey’s inception in 2013.

In addition, 10.9% of respondents anticipate failing to make a minimum loan payment in 2023.

Gas prices have increased by 13 cents per gallon over the past month, with the nationwide average now at $3.60 per gallon. Food prices are also a significant concern for American consumers.

For now, food prices are expected to rise by 5.9%, a decrease of 1.4 percentage points from the survey conducted one month ago.

The Inflation Report

The forthcoming inflation report, scheduled for release on April 12, will likely validate economists’ expectations of numbers consistent with the previous six months.

If this is the case, the Fed will probably continue to raise interest rates. That is the reality because the core consumer price index is expected to increase by 5.6% from a year ago, far exceeding the inflation target of 2%.

Despite indications that inflation is moderating, the survey reveals that the public remains highly concerned about expenses and their impact on American households.

Economic data for U.S. households indicates that as more families take on second and third employment, they struggle. As fears of a recession continue to grow, the economic prognosis of Americans portrays a dismal picture of consumer sentiment.

This article appeared in NewsHouse and has been published here with permission.