A Gallup poll conducted this month showed that Americans see the economy more negatively than positively – with only 29 percent saying the economy is improving, while 67 percent believe it is getting worse.
Still, 72 percent say it’s a good time to find a quality job.
“It’s about what you prioritize,” said Allison Schrager, an economist and senior fellow at the Manhattan Institute, a conservative think tank. Politicians in Washington decided to make the mistake of providing too much pandemic aid instead of too little – and Mrs Schrager is among the analysts who say the trade-off between this decision is becoming clear. If there had been less stimulus, she said, “inflation would not be as bad as it is.”
At a news conference Wednesday, Fed Chairman Jerome H. Powell admitted that “bottlenecks and supply constraints limit how quickly production can respond to higher demand in the short term,” and that “these problems have been bigger and longer-lasting than expected.”
While analysts are considering the direction and degree of price increases this year, many see the spring months as a crucial turning point, says Ellen Zentner, CEO and chief economist of the United States at Morgan Stanley. This is due in part to the fact that the consumer price index reports in March and April this year will provide the first relatively stable year-on-year comparisons that experts will have seen in three years: 2020 data were equated with the pre-pandemic normal in 2019; reports in 2021, after the economy reopened, were measured against the abnormal, partially depressed environment of the vaccine-free economy in 2020.
“The hope is that it will change as we enter the second quarter,” Zentner said. And high single-digit inflation “no longer drags into the year.”
During quarterly earnings calls, JPMorgan Chase and Bank of America, which serve a total of 140 million households, have reported that families’ finances are technically better than before the pandemic. Bank of America said its customers spent a record $ 3.8 trillion in 2021, a jump of 24 percent from 2019 levels. But analysts note that dwindling savings and continued price increases – along with any new coronavirus variants – could slow consumption.
The report on Thursday indicated that the cash reserves that many Americans were able to build up during the pandemic continued to decline: Real disposable personal income fell by 5.8 percent in the fourth quarter, and the personal savings rate – the percentage of that total disposable income that goes to savings each month – was 7.4 percent compared to 9.5 percent in the third quarter.