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Americans’ Inflation Expectations Hit New High As Soaring Prices Erode Paychecks

   DailyWire.com
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As price levels continue to rise, a key metric for consumer inflation expectations followed suit.

After the Bureau of Labor Statistics announced that consumer prices rose at a 6.8% rate last month — the largest year-over-year increase since 1982 — the Federal Reserve Bank of New York’s Survey of Consumer Expectations revealed that Americans foresee higher short-term inflation:

Median one-year-ahead inflation expectations increased to 6.0% from 5.7% in October. Median three-year ahead inflation expectations decreased to 4.0% from 4.2% in both September and October. This is the first decline in the three-year measure since June 2021, and only the second decline since October 2020. 

The decline in medium-term expectations was driven by respondents without a college degree. Measures of disagreement across respondents (the difference between the 75th and 25th percentiles of inflation expectations) increased at both horizons to new series highs.

Median inflation uncertainty — or the uncertainty expressed regarding future inflation outcomes — increased at both the short- and medium-term horizons, with both reaching new series highs.

Likewise, Americans — especially those with lower incomes — expect to earn less while spending more:

The median expected growth in household income fell by 0.1 percentage point from its series high in October, to 3.2%. Median year-ahead household spending growth expectations jumped up by 0.3 percentage point to 5.7%, a new series high. The increase was largest for respondents with annual household incomes under $50,000.

Perceptions of credit access compared to a year ago deteriorated slightly in November, with fewer respondents finding it easier to obtain credit now than a year ago. Expectations about future credit availability deteriorated as well, with fewer respondents expecting it will be easier to obtain credit in the year ahead.

Indeed, a rebound in wages following COVID-19 and the lockdown-induced recession has been eclipsed by higher price levels. Last week, the Bureau of Labor Statistics stated that “real average hourly earnings” — a metric that considers the impact of inflation on purchasing power — fell by 0.4% between October and November. Though nominal average hourly earnings rose by 0.3%, the effects were overshadowed by a 0.8% increase in consumer prices.

As persistent supply chain bottlenecks, lavish federal stimulus, labor shortages, and other phenomena continue to rock the United States, the Biden administration is allegedly pushing news outlets to provide more favorable coverage of its economic policies.

“The White House, not happy with the news media’s coverage of the supply chain and economy, has been working behind the scenes trying to reshape coverage in its favor,” said CNN’s media newsletter. “Senior White House and admin officials — including NEC Deputy Directors David Kamin and Bharat Ramamurti, along with Ports Envoy John Porcari — have been briefing major newsrooms over the past week, a source tells me.”

“The officials have been discussing with newsrooms trends pertaining to job creation, economic growth, supply chains, and more. The basic argument that has been made: That the country’s economy is in much better shape than it was last year. I’m told the conversations have been productive, with anchors and reporters and producers getting to talk with the officials.”

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