(CTN News) – Despite an extended period of gloom, Americans are starting to feel better about inflation and the economy – a trend that could sustain consumer spending and fuel economic growth.
A University of Michigan measure of consumer sentiment has jumped. American expectations are at their lowest in nearly three years. According to last week’s survey, more people expect their finances to improve within a year.
Inflation has slowed, incomes have risen, gas prices have dropped, and stocks are up. As of June 2022, inflation was 9%. The Fed’s preferred price gauge has reached its 2% annual target over the past six months.
Also, paychecks have outpaced over the past year, easing Americans’ adjustment to higher living costs. Last week, the government reported that wages for the typical worker rose 2.2% after adjusting for inflation. So inflation-adjusted pay is up 2.5%. The good news is finally getting through to consumers, says Oxford Economics analyst Grace
Zwemmer Even though inflation has slowed down, prices are still almost 17% higher than they were three years ago.
While some goods are getting cheaper, overall prices will probably stay high. That dichotomy – a rapid drop in inflation but a still-elevated cost of living – will likely set up a question in voters’ minds,
Who are still suffering the effects of the worst inflation in 40 years.
Are prices higher now than they were three years ago or is the dramatic drop in inflation more important in the presidential election?
Take food, one of the most common items people buy. As of August 2022, grocery inflation was 13.5%, but now it’s just 1.3%. Still, groceries are 20% more expensive than they were in February 2021. Chicken prices are up 25% on average. Bread is too. A pandemic has made milk 18% more expensive.
The cost of renting an apartment has also gone up since the pandemic. In the year before the pandemic, rental prices were up 6.5%. Rents rose nearly 9% in early 2023.
For 30-year-old Romane Marshall, who lives outside Atlanta, sharply higher food and rent costs still represent a heavy burden. Late in 2020, Marshall took computer coding classes to advance his career. He was hired in April 2021 by a professional services consulting firm, and after completing an apprenticeship program, his pay increased to $60,000.
Marshall’s grocery bill was $70 to $80 three years ago. Currently, it costs $120 to $130. Occasionally, he uses the heat to save money. Only food prices are still high, he said. “I noticed that everything got more expensive.” Some Americans are happier now than they were before. Since the 1960s, the unemployment rate has been below 4% for nearly two years.
In her opinion, the economy is improving. Both he and his wife got raises that offset price increases.
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