Some economists advised patience. The Fed has kept its federal funds rate, which influences other interest rates in the economy, at the same level – about 5.5% – since last summer.
Thanks to other external forces, especially the normalization of supply chains in the wake of pandemic disruptions, prices for many important consumer goods have largely stopped rising, and in some cases—as with airline tickets, vehicles, and many electronic products — are now declining.
Today, most of the ongoing price increases are in housing, which the BLS tracks in its shelter index. While these costs have decreased annually every month since April 2023, they are still above 5%.
“Stuck is a good word,” said Mark Franceski, managing director of Zelman & Associates, a real estate research and consulting firm.
While some so-called point-in-time measures of rents, from groups like CoreLogic and Zillow, show price declines in some cities, the BLS housing cost survey is designed to capture changes in housing values, Franceski said.
The research recently came under scrutiny, with critics saying it does not accurately reflect how consumers experience housing costs. For example, it asks homeowners how much they think they could rent their home for if they decided to do so – anecdotal and not based on day-to-day spending.
But Franceski said it still has value. “They’re getting a decent reading,” he said of the BLS survey.
Electoral implications
Even if inflation data improves in the coming months, surveys suggest that consumers are still adapting to a new higher cost environment.
Since the start of the pandemic in spring 2020, the CPI has cumulatively risen 22%. It’s one of the reasons consumer confidence measures remain below pre-pandemic levels.
Erik Lundh, senior global economist at economic insights group The Conference Board, estimates that the amount of inflation accumulated since the pandemic is equivalent to the price increases that occurred over a 10-year period following the 2008-09 global financial crisis.
“It takes time for consumers to digest this increase,” he said. “When you extend the deadline by more than a decade, memories of what you paid 10 years ago at the supermarket fade away – but not three years ago. So the inflation we’ve seen is fresher in the mind, and that really weighs on them. “
It may also help explain why at least one recent poll found that 41% of registered voters have greater trust in Donald Trump, who is running to regain the White House, to manage the economy, compared to 37% who favor President Joe Biden – although this difference has narrowed in recent months.
However, several surveys have shown that the majority of Americans mistakenly believe that the US economy is in recession, despite continued wage gains in many sectors and a still historically low unemployment rate of 4%.
“Consumers have been consistently pessimistic about the outlook for the next 12 months,” Lundh said.
This story originally appeared on NBCNews.com read the full story
