On Wednesday, the Federal Reserve will announce what to do with interest rates as it tackles inflation. Meanwhile, middle-class Americans’ views on the economy are more mixed A new poll by Harris. The majority, 44% of respondents, say they stress about the economy. This is 4 percent more than last year. 34% say they are confident – up from 8%. So, why is the economic picture so bleak?
The most compelling area in Alex Loeber’s home is the kitchen.
„If we had a food pantry, I think it would save our collective mental health 50%,” Loeber said.
Loeber, his wife and child live in a two-bedroom house in Atlanta. They want to move to a bigger place. But with interest rates so high, that may not be possible now. So, they store food under the TV.
„Those things are usually pulled out by our two-year-old, and sometimes you only have a few cans of tomatoes,” Loeber said.
A few dented cans isn’t the end of the world. But it’s one of those frustrating, daily reminders of the trade-offs Loeber’s family makes when it comes to housing, groceries and daycare, because after years of squirreling away a few dollars, “we don’t feel like we’re building. Those savings are no longer,” Loeber said.
Personal savings rate has decreased significantly From its historical epidemic rise. This means that the spending Americans have undertaken is far less fun or doable. Especially now, as costs are significantly and permanently higher, said Isabel Sahil, a senior fellow at the Brookings Institution.
„They thought it was all temporary. So very soon prices are going to come down again. I think they’re surprised they haven’t come down,” Sahil said.
Change is hard. Even if you raise how much extra you spend at the grocery store, it’s no fun.
„Some of it is just an adjustment process. You have to make changes in your life, and changes always create anxiety,” Sahil said.
He said some worries will go away with time. Maybe it has finally started. Justin Wolfers, an economist at the University of Michigan, reports that 34% of people are optimistic.
“More and more people are looking for work. More people are starting businesses,” Wolfers said.
Plus, he said, it’s a matter of people feeling a certain way about the economy. But what matters is how they participate in it.
„The truth is, if you want to measure how confident people are, the best way to do it is to look at their spending patterns,” Wolfers said.
If people think there are dark storm clouds around the corner, they will stop spending, he said.
There’s a lot going on in the world. After all, the market is here for you.
You rely on Marketplace to break down world events and tell you how it affects you in a fact-based, accessible way. We count on your financial support to make it possible.
Your donation today powers the independent press you rely on. For just $5/month, you can help sustain Marketplace so we can continue to report on the things that matter to you.