According to a survey conducted by the New York Federal Reserve, American consumers are growing increasingly uneasy about inflation, unemployment, and the stock market as global trade tensions increase. The survey found that 44% of respondents now expect the unemployment rate to be higher one year from now which would be the highest percentage since early COVID-19. Inflation expectations for next year also jumped to 3.6%, the highest level since October 2023. Market confidence has also taken a hit as well. Only 33.8% of respondents expect stocks to be higher in one year from now. Expectations for cost of food, rent, and medical care also continue to climb, demonstrating the expansive impact that tariffs have on the economy.
The survey's results show the broader economic fragility that is being shaped by the ongoing trade war. While market-based inflation remains relatively contained, public perception tells a different story. Consumers may begin to cut back on spending if they anticipate worsening economic conditions. With President Trump's tariff announcements continuing to add fuel to the unstable environment, consumer and business confidence are extremely fragile.
3 comments:
This Fed survey highlights an important disconnect between market indicators and public sentiment. Even though market-based inflation remains relatively stable, consumers are clearly feeling the pressure—expecting higher prices and job losses. This anxiety can have real economic consequences, especially in a demand-driven economy like ours. If people cut back on spending due to fears of inflation and unemployment, it could trigger the very slowdown they’re worried about. It also shows how trade policies, like tariffs, can ripple through the economy not just by affecting prices, but by undermining confidence in both consumers and investors. From a systems perspective, it raises questions about how much economic outcomes are driven by structural policies versus expectations and behavior.
Expectations are a huge part of what truly influences the direction of the economy. One thing that I think is interesting in terms of where we are now is that Powell believes and stated that the US economy is in good shape and is still standing strong regardless of the turmoil the markets have experienced in the past week. Additionally, this is also a time where investors are dumping US debt. Lots of moving pieces.
This article shows how rising trade tensions are shaking consumer confidence in the U.S. With inflation and unemployment fears at their highest since COVID-19, people are increasingly pessimistic about the economy. Even if market inflation stays stable, public anxiety could lead to reduced spending—putting further strain on economic recovery.
Post a Comment