Trump’s approval rating is low, but as the midterm elections approach, he will receive a huge military budget.
Low inflation and unemployment are both good news for the economy, but voters aren’t feeling it. That could be a blow to Republicans in the midterm elections.
In what appears to be the calm before the storm, Americans’ inflation expectations changed little in February amid varying views on the state of the job market and current and future finances.
In its latest survey of consumer expectations, the Federal Reserve Bank of New York announced that expectations for inflation three and five years out will remain stable at 3%, while expected inflation one year from now will fall to 3% from 3.1% in January.
The New York Fed survey, released on Monday, March 9, was conducted from February 2 to 28. As a result, it does not capture the public’s reaction to soaring oil prices as a result of President Donald Trump’s war with Iran, which has caused massive disruption to global energy supplies.
The large increases in energy prices we have seen so far are almost certain to push up overall inflation, which is already high, and may well lead the public to a less favorable view of the outlook for price pressures in the coming years.
This will be a difficult environment for the Fed, which has been struggling for some time with high levels of inflation and a very slow retreat in price pressures toward its 2% target. Officials agree that where price pressures are expected to go will have a strong impact on the current situation, so if an oil shock creates expectations that price pressures will increase, it could complicate efforts to get inflation back on target.
A survey by the New York Fed also found that the employment situation was relatively stable in February. Despite the continued lackluster job market performance, survey respondents last month said they expected future unemployment rates to be lower and the likelihood of job loss to be lower than in January. But respondents also said last month that finding a new job would be harder than they thought at the beginning of the year.
The survey also found that respondents said it was harder to get credit in February compared to January, but that it will be easier in the future. They were more optimistic about their current finances in February compared to the previous month, but held stable views about the future state of their finances.
On Friday, the University of Michigan is scheduled to release its latest report on consumer sentiment, which could provide an updated look at how the nation is factoring the energy surge into its inflation outlook.
Deutsche Bank economists said in a note Monday that U.S. oil production could cushion the impact of higher global prices. But they added that “inflation has been too high for too long and the latest data cast doubt on how much disinflation can reasonably be expected, especially if measures of inflation expectations rise.”
