Americans are predicting that inflationary pressures will continue to build steam, while about half of them are claiming financial hardships because of the rise in prices, indicating a morose economic outlook for at least the next six months.
Based on a recent Gallup poll, nearly eight in 10 Americans believe that inflation will continue to increase, with half expecting the rate to “go up a lot.” Almost 10 percent of them expect inflation to go down or remain the same.
A total of 78 percent of those surveyed anticipate interest rates going 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 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 in September 2005 with 76 percent. The recent poll was taken from Jan. 3 to Jan. 16; the indices have been on a downward trend since Jan. 12.
Omicron-related issues, the stand-off in Ukraine, and worries about how aggressively 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 2021, the fastest increase in almost four decades. The Producer Price Index, which is a leading indicator of near-future consumer prices, surged by 9.7 percent after lowering by 1 percentage from November 2021.
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) were least likely to say that they were suffering from rising prices compared to independents (57 percent) and Republicans (60 percent).
While inflation wasn’t one of the biggest problems facing the country in early 2021, almost 8 percent of the respondents have named it the biggest issue today 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 doesn’t seem to have affected expectations regarding the job market. A total of 72 percent of Americans believe it’s 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.