A new CBS/YouGov poll found that nearly two-thirds of Americans said the U.S. economy is in bad shape — the worst record since the depth of the pandemic last summer — while 84 percent of those who rated the economy negatively blamed inflation.
The poll, conducted Nov. 15-19 of a nationally representative sample of 2,058 adults, found that 64 percent of those polled said the economy is in “fairly bad” or “very bad” condition. That’s the worst reading since the summer of last year, according to CBS, when pandemic lockdowns and other outbreak-related issues lowered sentiment.
The top reasons among those who said the economy was in bad shape were inflation and rising costs (84 percent), rising gas prices (74 percent), shortages of products and services (71 percent) and companies still not coming back. to be normal (60 percent).
At the same time, 82 percent of respondents said the items they usually buy cost more in early November than before.
Inflation has emerged as a major theme of the pandemic-era economic recovery, eroding the purchasing power of Americans, whose wages have risen, but at a slower pace than prices.
Rising prices are responsible for a sharp drop in consumer confidence, which hit a 10-year low in November, according to a study by the University of Michigan.
“Consumer confidence fell to its lowest level in a decade in early November, reflecting escalating inflation and growing consumer belief that effective policies have not yet been developed to mitigate the damage of rising inflation,” Richard Curtin, the research director, said in a statement.
In addition to becoming a major problem for many Americans, rising prices have also become a political problem for the Biden administration.
The CBS/YouGov poll found that 67 percent of Americans disapprove of President Joe Biden’s handling of inflation.
Meanwhile, rising prices have fueled future inflation expectations. The New York Fed’s most recent survey of inflation expectations found that short-term inflation expectations (one year ahead) rose to 5.7 percent in October, the highest level in the history of the series. Medium-term inflation expectations (three years ahead) remained unchanged from the 4.2 percent level a month earlier, which was a record high.
The rise in future inflation expectations has put Fed officials on edge, who seem increasingly concerned about a potential easing of inflation expectations, a situation where people are beginning to change their spending behavior based on expectations of future price increases.
John Williams, president of the Federal Reserve Bank of New York, said last week that inflation in the United States was broadening and expectations for future price hikes are rising.
“We have certainly seen a rise in underlying inflation in the US that we will be studying carefully,” Williams said during a virtual panel with Philip Lane, chief economist at the European Central Bank (ECB).
Williams said a rise in short- and long-term inflation expectations is a “positive” development, as expectations have reversed some of their previous declines. At the same time, Fed officials would not want long-term inflation expectations to rise significantly further, Williams added.
It comes at a time when a number of prominent economists, including former Obama-era officials, have been raising alarms about rising inflation, which reached 6.2 percent in October, the highest annual rate since 1990.