Posted 2/26/2024, 8:35:16 PM
High Interest Rates May Explain Why Consumers Feel Squeezed Despite Strong Economy
- Research paper proposes high interest rates explain disconnect between strong economy and weak consumer sentiment
- Higher rates increase consumers' cost of living through higher debt financing costs
- These financing costs not factored into inflation measures like CPI
- Alternative inflation measures including financing costs align better with consumer sentiment
- More data needed to know if we're in a new economic paradigm due to latest inflation bout
