Americans are predicting that inflationary pressures will continue to build up steam, while about half are claiming financial hardships because of the rise in prices, indicating a morose economic outlook at least for the next six months.
Based on a recent Gallup poll, nearly eight in 10 Americans believe inflation will keep on increasing with half expecting the rate to “go up a lot.” Almost 10 percent equally expect inflation to go down or remain the same.
Seventy-eight percent of people surveyed anticipate interest rates to go up, 46 percent are optimistic about the stock markets, and 43 percent expect unemployment to go down during the next six months. There were almost an equal number of takers on whether the economic growth will increase or decrease.
Gallup surveys have always had Americans predicting higher inflation, but the current expectation is the highest ever measured. The previous high was back in September 2005 with 76 percent. The recent poll was taken from Jan. 3–16; the indices have been on a downward trend since Jan. 12.
Omicron-related issues, the stand-off in Ukraine, and worries on how aggressive the Federal Reserve will pursue rate hikes have weighed heavily on markets. Consumer prices have risen by 7 percent in the 12 months through December, the fastest increase in almost four decades. The Producer Price Index, which is a leading indicator of near-future consumer prices, surged 9.7 percent after lowering one percentage from November.
Without a corresponding increase in wages, the average American’s disposable income has been slashed while costs of essential products, including food and fuel, have vaulted to levels causing severe hardship for almost 10 percent of those surveyed.
The price hikes are most sensitive in lower income brackets with 20 percent of households earning less than $40,000 bearing the brunt of it. Forty-seven percent of those earning $40,000 to $99,999 and 29 percent of people earning more than $100,000 are facing moderately hard times.
According to the survey, those who vote Democrat (36 percent) are least likely to say they were suffering from rising prices compared to independents (57 percent) and Republicans (60 percent).
While inflation was not one of the biggest problems facing the country in early 2021, almost 8 percent of the respondents named it the biggest issue currently in an open-ended question format. This corresponds to the results from 1982 (31 percent) when the nation was facing similar levels of inflation.
Political partisanship (23 percent) and the COVID-19 pandemic (20 percent) have occupied the top two spots for the leading issues facing the country. Upper-middle Americans (13 percent) are most likely to identify inflation as a key issue; more than those in the middle (9 percent) and lower (3 percent) income brackets.
The pessimism regarding inflation does not seem to have affected expectations regarding the job market. Seventy-two percent of Americans believe that it is a good time to find a quality job, which is among the highest since Gallup began to measure the metric in 2001. In October 2021, the number was at 74 percent.