Inflation is the number one economic concern among consumers today. It's also moderated significantly since the summer of 2022; the prices of durable goods are even deflating a bit. The labor market remains strong, boosting consumer spending. Stocks are at all-time highs.
Yet, according to a recently released Fed survey, only 22% of Americans think the US economy is in good or excellent shape, down from 50% before the pandemic. The survey was conducted during October of last year. So why are so many people so negative on the economy? Here are a couple of good reasons:
(1) Consumers are upset that many prices of essentials are much higher than they were before inflation spiked in 2022. For instance, auto insurance premiums and auto maintenance & repair costs have soared (chart).
(2) Home affordability is still around the lowest since before the housing bubble burst during the Great Financial Crisis (chart). Lots of would-be first-time homebuyers have no choice but to continue to pay rents, which remain higher than before the pandemic.
