A new CBS/YouGov poll showed that nearly two-thirds of Americans said the U.S. economy is in bad shape—the worst outcome since the depths of the pandemic last summer—while 84 percent of those who gave the economy a negative rating blamed inflation.
The poll, carried out between Nov. 15-19 on a nationally representative sample of 2,058 adults, showed that 64 percent of those surveyed said the economy is in “fairly bad” or “very bad” shape. That’s the worst reading since summer of last year, according to CBS, when pandemic lockdowns and other outbreak-related issues drove down sentiment.
The top reasons among those who said the economy is in bad shape were inflation and rising costs (84 percent), surging gas prices (74 percent), a shortage of products and services (71 percent), and businesses still not back to normal (60 percent).
At the same time, 82 percent of respondents said that the items they usually buy were costing more at the beginning of November than before.
Inflation has emerged as a key theme of the pandemic-era economic recovery, eroding the purchasing power of Americans, whose wages have risen—but at a slower pace than prices.
“Consumer sentiment fell in early November to its lowest level in a decade due to an escalating inflation rate and the growing belief among consumers that no effective policies have yet been developed to reduce the damage from surging inflation,” Richard Curtin, the survey director, said in a statement.
Besides becoming a key issue for many Americans, surging prices have also become a political problem for the Biden administration.
The CBS/YouGov poll showed that 67 percent of Americans disapprove of President Joe Biden’s handling of inflation.
Meanwhile, rising prices have fueled an uptick in future inflation expectations. The New York Fed’s most recent consumer inflation expectations survey showed that short-term (one year ahead) inflation expectations rose in October to 5.7 percent, the highest reading in the history of the series. The medium-term (three years ahead) inflation expectations remained unchanged from the prior month’s level of 4.2 percent, which was a record high.
The rise in future inflation expectations has put Fed officials on edge, who appear increasingly concerned about a possible de-anchoring of inflation expectations, a situation where people begin to change their spending behavior based on expectations for future price increases.
New York Federal Reserve Bank President John Williams said last week that inflation in the United States was becoming more broad-based and expectations for future price increases are on the rise.
“We definitely have seen a pickup in underlying inflation in the U.S. that we’ll be studying carefully,” Williams said during a virtual panel with European Central Bank (ECB) chief economist Philip Lane.
Williams said that a rise in short-run and long-run inflation expectations are a “positive” development, because expectations have reversed some of their previous declines. At the same time, Fed officials would not want long-run inflation expectations to move up significantly more, Williams added.
It comes as a number of prominent economists, including former Obama-era officials, have increasingly sounded the alarm on surging inflation, which in October hit 6.2 percent, its highest annual rate since 1990.