Posted 12/8/2023, 8:46:47 PM
Inflation Expectations Drop to Lowest Levels Since 2021, Supporting Fed's Soft Landing Hopes
- Americans expect lower inflation, with expectations falling to 3.1% from 4.5% last month based on University of Michigan consumer sentiment survey
- This is the lowest inflation expectation since March 2021 and signals consumers believe prices are cooling
- Lower inflation expectations support the Fed's goal of reducing inflation while maintaining strong employment
- Some economists caution that while data points to a potential soft landing, risks remain that higher rates lead to slower growth
- Consumer sentiment still remains far below pre-pandemic levels in February 2020, so still room for further improvement