Americans fear worst inflation rate since 2013
Median expectations for the inflation rate for the next 12 months rose to 3.4%
Mick Mulvaney, former acting White House chief of staff and former OMB director, provides insight into tax and spending plans, bipartisanship and unemployment under the Biden administration.
U.S. consumers' inflation fears grew in April as the nation's economic recovery from the coronavirus pandemic accelerated, boosted by trillions in government stimulus.
Median expectations for the inflation rate for the next 12 months rose to 3.4% from 3.2% last month, according to the New York Federal Reserve's Survey of Consumer Expectations. Expectations for inflation over the next three years remained unchanged at 3.1%, the highest since July 2014.
YELLEN SAYS INTEREST RATES MAY NEED TO RISE TO STOP ECONOMY OVERHEATING
Expectations for home-price inflation rose to a record-high of 5.5%, up from 4.8% the previous month, amid as a housing boom has driven a surge in property values nationwide. Consumers said they expect gas prices and medical care to cost less in the coming year, but indicated they're preparing to pay more for things like rent and college tuition.
Some investors and critics have raised concerns in recent weeks that low interest rates, combined with massive spending proposals from the Biden administration, could lead to a rise in inflation unseen for years.
Since the pandemic began a little more than one year ago, Congress has approved nearly $6 trillion in federal spending designed to keep the nation's economy afloat. The exorbitant level of spending pushed the nation's deficit to a record $3.1 trillion for the 2020 fiscal year and a high of $1.7 trillion for the first half of fiscal 2021.
The Federal Reserve has held interest rates near zero since March 2020, even as the economy's recovery from the pandemic rapidly strengthens.
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Policymakers voted unanimously during their two-day policy-setting meeting two weeks ago to leave the benchmark federal fund rates unchanged at a range between 0% and 0.25% and pledged to do so until "labor market conditions have reached levels consistent with the Committee's assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time."
Chairman Jerome Powell has repeatedly stressed that these conditions are unlikely to occur this year. Economic projections from policymakers' last meeting show that most officials expect rates to remain near zero through 2023.
Powell has stressed that a recent uptick in inflation is "transitory" and has downplayed concerns about prolonged price increases.
"An episode of one-time price increases as the economy reopens is not likely to lead to persistent year-over-year inflation into the future," he said last month.
There are still roughly 8.4 million fewer jobs than there were before the pandemic struck, and the jobless rate remains at 6.1%, well above the half-century low it sat at in February 2020.