The US economy is in an overheated state, with declining manufacturing activity, high everyday prices, and a tight labor market, causing Americans to feel a significant cost of living crunch and prompting a warning that they should "hunker down" and be cautious with their finances, according to global economist Nancy Lazar. Excessive government spending is blamed for the high prices, and an impending recession is expected to add further pressure on all wealth groups. To achieve economic recovery, Lazar emphasizes the importance of private sector-driven growth and the need for reduced government spending and entitlement reform.
Removing the fictional "owner equivalent rent" (OER) from price indexes reveals that inflation has decreased more than reported, with the year-over-year inflation rate falling from 3.2% to 1.5% and the personal-consumption expenditures price index declining from 3% to 2.2%.
New hires are experiencing declining wages in various sectors such as technology and transportation, which could impact job hopping and take time to reflect in federal data, posing challenges for the Federal Reserve in managing inflation.
The US economy is growing rapidly with favorable conditions for workers, but despite this, many Americans feel pessimistic about the economy due to inflation and high prices, which are driven by complex global forces and not solely under the control of President Biden or Trump. Housing affordability is also a major concern. However, the Biden administration can still tout the economic recovery, with low unemployment and strong economic growth forecasts.
Despite signs of declining U.S. inflation, a majority of Americans, particularly those living in rural areas, are experiencing higher grocery prices under President Biden's economic policy, known as Bidenomics. Concerns about inflation and reliance on partisan news contribute to the perception of economic challenges, despite reports of a strong U.S. economy.
The U.S. housing market is currently experiencing a decrease in affordability due to high mortgage rates and stubbornly high prices, with affordability levels lower than during the 2006 housing bubble; however, experts do not predict a crash in the market due to a shortage of homes and a more stable lending environment.
US consumer spending is showing resilience and robust growth, although signs of a slowdown are emerging, potentially related to the public's perception of a deteriorating financial situation due to high inflation and rising interest rates, despite the fact that households still have higher deposits compared to pre-pandemic levels.
Consumer prices in the US rose 0.2% from the previous month, and 3.3% annually, indicating persistent high inflation and posing a challenge to the Federal Reserve's efforts to curb it; core prices, which exclude food and energy, also increased 0.2% from the previous month and 4.2% from the previous year.
US inflation remains too high despite recent improvements, according to Federal Reserve Bank of Cleveland President Loretta Mester, who also states that the labor market is still strong.
The US economy grew modestly in July and August, with signs of consumers relying more on borrowing to support spending after depleting their savings, while inflation slowed due to decreasing price pressures in the goods sector, according to the Federal Reserve's Beige Book report.
Despite the cooling inflation rate, the cost of goods and services in the United States has significantly increased, making it more expensive for the majority of workers to live, which contributes to their unhappiness about the economy.
The Federal Reserve may be the cause of rising housing prices and the low supply of existing homes, which could lead to increased inflation and concerns about the Fed's response to the cost of living. Lowering interest rates and unlocking the supply of homes could help alleviate the issue.
Inflation has decreased significantly in recent months, but the role of the Federal Reserve in this decline is questionable as there is little evidence to suggest that higher interest rates led to lower prices and curtailed demand or employment. Other factors such as falling energy prices and the healing of disrupted supply chains appear to have had a larger impact on slowing inflation.
The aging population in America, particularly the boomers, is driving up housing demand and prices, leading to an affordability crisis and locking out middle-income buyers in the market.
Inflation has led to difficult financial conditions for Europeans, with one in four experiencing a "precarious" situation and resorting to skipping meals and making complicated financial choices, according to a new survey.
US inflation has slowed over the past year and wages are not a reliable indicator of future price increases, according to Federal Reserve officials.
Consumer spending has remained resilient, preventing the US economy from entering a recession, and this trend will likely continue due to low household debt-to-income levels.
Consumer spending in the US is expected to decline in early 2024, marking the first quarterly decline since the start of the pandemic, according to a survey by Bloomberg. The pessimism is attributed to high borrowing costs and the depletion of COVID-era savings.
Americans are expecting high inflation to persist over the next few years, with a median expectation of 3.6% one year from now and estimates of around 3% three years from now, according to a survey by the Federal Reserve Bank of New York. This suggests that sticky inflation may continue to be a concern, as it surpasses the Fed's 2% target. Consumers also anticipate price increases in necessities such as rent, gasoline, medical costs, and food, as well as college tuition and home prices.
Investors and the Federal Reserve will have to wait for inflation to return to acceptable levels, as the Consumer Price Index report for August 2023 shows consumer prices rising at half the pace compared to a year ago, despite a jump in gas prices.
British grocery inflation fell to its lowest level in a year in September, with prices rising fastest in products such as eggs, sugar confectionery, and frozen potato products, providing some relief for consumers and the government.
The United States is experiencing inflationary pressures due to rising home prices and rental costs, posing challenges for homebuyers and renters, and potentially leading to broader increases in related services and inflation in other categories. Fed regulators are expecting deflationary trends in the future, but the interaction between housing data and the broader economy is crucial. The imbalance between supply and demand in the housing market needs to be addressed for prices to stabilize.
Despite increased household wealth in the US, millions of households are struggling financially due to inflation, high interest rates, and rising living costs, which have led to record levels of debt and limited access to credit.
The Consumer Price Index (CPI) rose 0.6% in August, while CPI inflation increased to 3.7% on a year-over-year basis, driven by surging oil prices, but core inflation fell to its lowest level since mid-2021, possibly indicating comfort for the U.S. Federal Reserve.
Inflation is expected to fall below the Federal Reserve's 2% target by late next year, despite a recent rise in consumer prices driven by increased energy costs.
The median household income in the United States fell by 0.8 percent in 2022, adjusted for inflation, indicating concerns about the state of the economy; however, five states saw increases in income while 17 states saw decreases, and income inequality in the country has increased between 2021 and 2022.
The Consumer Price Index (CPI) for this month shows that core CPI and all items CPI were slightly above expectations and accelerating, with the primary contributors to the acceleration being core services ex housing and energy, which may be a concern for the Fed. Additionally, owner's equivalent rent was a significant positive contributor to the monthly change in CPI, while used cars and trucks had a negative impact. There is potential for a re-acceleration of inflation, which could have negative implications for equity markets.
U.S. retail sales rose more than expected in August due to higher gasoline prices, but underlying spending on goods slowed as Americans faced increased inflation and borrowing costs, while the trend in underlying spending on goods was not as robust as initially thought in July. Despite this, overall consumer spending is expected to remain strong, driven by spending on services.
The US economy shows signs of weakness despite pockets of strength, with inflation still above the Fed's 2% target and consumer spending facing challenges ahead, such as the restart of student loan payments and the drain on savings from the pandemic.
Consumers' inflation expectations have reached the lowest level since March 2021, with expectations of a 3.1% rise in prices over the next year, according to new data from the University of Michigan, signaling a positive sentiment for the Federal Reserve's fight against inflation.
American workers are facing a decline in median annual household income due to high inflation, with 17 states experiencing a decrease while only five saw an increase, according to data from the Census Bureau. The labor market remains challenging, with wages rising but not enough to keep up with inflation.
Housing affordability is expected to worsen due to the delayed impact of higher mortgage rates, with home prices predicted to rise 0.7% year over year and reach a new record high, according to Morgan Stanley.
US inflation is expected to continue its slowdown in the coming months due to easing car prices, declining rents, and a potential slowdown in the job market.
Despite assurances from policymakers and economists, inflation in the US continues to rise, posing significant challenges to the economy and financial stability.
Americans are facing persistent inflation and a high cost of living, but elite economists and academics are disconnected from the reality and dismissive of the struggles of everyday Americans.
The retail, leisure and hospitality, and accommodation and food services industries experienced wage growth that outpaced inflation due to the high demand and staffing shortages after the pandemic, but there are no guaranteed inflation-proof industries, and it is important for individuals to focus on securing jobs that offer upward mobility and higher income to keep up with inflation.
