Americans’ inflation worries have gotten to a fever pitch in June, increasing to the highest level since June of 2013 as the price of consumer products kept surging, according to a Fed Bank of New York survey released on Monday.
The median expectation is for inflation to be up 4.8% in one year, a fresh high for the number, and up 3.6% in three years, the highest since Aug. 2013, according to the NY Fed’s Survey of Consumer Expectations.
Americans are also seeing the prices of homes continue to rise, with one-year expectations not changed from the 6.2% reported in June – much higher than the past one-year average at 3.7%.
Still, consumers report they expect the price food and fuel to decline slightly, while expectations for college tuition went up to 7% – the highest number since April 2019.
Fed Chairman Jerome Powell has overall downplayed the increasing prices for services and goods, blaming the uptick on widespread bottlenecks that have greatly disrupted the supply chain and a flood of pent-up demand from consumers who have a lot of cash. Though he is said inflation might turn out to be “greater and more persistent than initially expected,” Powell has stuck to the opinion that it is likely transitory.
Policymakers at the United States central bank are working on how to deal with the deeply conflicting data: While inflation is rising – in May, the government saw prices increased 5% from the year prior, the fastest y/y jump since 2008 – with job growth also being slower. There are still a total of 9.5 million unemployed American citizens.
During their policy-setting gathering in June, Fed leaders unanimously voted to keep interest rates close to zero, where they have been since March of 2020, and promised to keep buying $120 billion in bonds every month.
The Fed did not signal in June that it was getting close to scaling back its high bond-buying, even though officials did raise inflation expectations to 3.4% for the year – a point higher than March’s forecast.
Minutes from their June meeting showed that officials had spoke about when and how to start winding down their support, but most officials reiterated they were not ready to begin doing this.
Author: Steven Sinclaire