US

Americans are still weighed down by high inflation, though sentiment is improving | CNN Business



CNN Business
 — 

Americans are feeling more positive about the economy and believe inflation will settle down — but plenty of uncertainty is still swirling.

The University of Michigan’s consumer sentiment index for September settled in at 58.6, down slightly from preliminary readings of 59.5, according to findings from the school’s Surveys of Consumers. That’s the highest reading since April.

These mixed views were voiced by dozens of CNN Business readers, who said they thought the economy was improving somewhat, but were worried whether it would last. Many also said they continue to be burdened by high costs for food, housing and other necessities.

Consumer sentiment has rebounded significantly since hitting an all-time low in June as record-high gas prices weighed heavily on Americans’ finances. Despite the bounce back, sentiment levels are still comparable to those seen during the Great Recession.

The muted optimism about the economy is being felt by consumers across all income spectrums, said Joanne Hsu, Surveys of Consumers director.

“Sentiment for consumers across the income distribution has declined in a remarkably close fashion for the last six months, reflecting shared concerns over the impact of inflation, even among higher-income consumers who have historically generated the lion’s share of spending,” she said.

Inflation expectations declined in both the near term and looking five years out, survey data shows, with the median expected inflation rate for the next 12 months falling to 4.7%, the lowest reading since September 2021. And long-run inflation expectations ticked down to 2.7%, the lowest level since July 2021. Lower consumer expectations could translate to consumers reining in spending and asking for smaller wage increases — efforts that would align with the Federal Reserve’s mission to dampen demand and lower inflation.

On Friday, the Bureau of Economic Analysis released data showing the high prices are persisting. The Personal Consumption Expenditures price index for August showed that its core inflation measure, which excludes the volatile categories of food and energy, rose by 4.9% in August as compared to the year before, up from 4.7% in July. The monthly reading shot up by 0.6% from July to August. Core PCE is the Fed’s favored inflation metric.

Despite the uptick in consumer sentiment in recent months, many Americans still aren’t feeling great about the economy.

Though gas prices are now far below the record national average of $5.02 a gallon from mid-June, most people are still shelling out more for food, housing, energy and other essentials.

Marcus Satterfield, 34, is happy that he’s back to paying around $60 to fill up his tank, down from nearly $100 this summer. But those savings aren’t offsetting the increases he’s seeing at the supermarket and other retailers around his Virginia Beach, Virginia, home.

A restaurant manager at a local hotel, Satterfield said he now pays between $400 and $450 a month for groceries for himself and his 4-year-old daughter, Marley, up from $300 in February. A family pack of chicken now costs around $20, he said, up from $13, while ground beef costs $1.50 more. He’s paying more for yogurt and snacks that Marley brings to pre-K.

Meanwhile, his rent shot up to $1,580, from $1,300, over the past two years, and he just got a notice from his electric company that the monthly charge will jump by more than $15.

To try to save money, Satterfield now buys more store-brand products and less seafood, even though his doctor recommended he eat more fish to improve his health.

“I make decent money, but when prices keep going up, it’s like the money I’m making is irrelevant,” said Satterfield, who feels that he’s taken a 40% pay cut because of inflation.

Other people are somewhat more hopeful that the economy is turning a corner and will improve.

Anthony Zuccarini, 45, said he’s “pleasantly surprised” every time he pulls into the gas station now. He paid $3.10 a gallon the last time he filled his tank, down from $4.50 a gallon over the summer.

Though the cost of cereal, milk and coffee at his local grocery store in Kansas City, Missouri, soared earlier this year, the prices have since stabilized. Another positive: Zuccarini’s 18-year-old son, Aden, recently landed a job at Dick’s Sporting Goods — two days after he applied.

Anthony Zuccarini, far right, canceled a family vacation this summer because of high prices. But the family hopes to take one in the spring.

Zuccarini, who works in marketing, and his wife, Aileen, an occupational therapist, scrapped a vacation this summer because hotels and gas were so pricey. The couple, who have three sons at home, are trying to save more money just in case one of them loses their job.

But now they plan to take a family trip in the early spring because they expect they’ll feel better about spending money on a vacation by then.

“Overall, I believe the economy is improving, albeit gradually,” said Zuccarini. “But at least it’s noticeable.”

Alexis Reyes of Wendell, North Carolina, describes the economy as an airplane that took a nosedive earlier this year. It’s since started to go back up, “but it’s a really slow and hard climb.”

Reyes, who works in talent acquisition for a supply chain company, still fears that the nation’s financial health could take a turn for the worse. And since her husband retired from his retail management job, she feels the added pressure of being the sole breadwinner who supplies the family’s health benefits.

Though Alexis Reyes feels she has a good job, she's concerned about the health of the economy.

So the couple, who have a teen son at home and two adult daughters, are being very cautious and trying to save as much as they can. They no longer use credit cards and now shop more at Dollar General and Walmart, rather than Publix. They order meat online to get a better rate and avoid any unnecessary car trips.

“It’s hard to be optimistic,” said Reyes, 50, pointing to the Federal Reserve rate hikes, the recent threat of a freight railroad strike and the potential for another Covid-19 surge this winter. “I want to be. I absolutely do. But it is really hard to be optimistic when every couple of months you’re hit in the face again with something else.”


Source link

Related Articles

Back to top button