Inflation is up — and Americans aren’t happy. But who among us is perhaps the most concerned, and why?
Factors of “age, region, education, and income” all shape consumer fears as to the direction of inflation, and create a “policy puzzle” for the Federal Reserve, The New York Times reports.
For one thing, older Americans are more concerned than younger Americans, perhaps because they rely on fixed incomes that are susceptible to rising prices and are out of the labor market. Separately, Americans in the South and Midwest (also conveniently where the majority of Republicans live) fear increasing inflation far more than those in the West and the Northeast, “home to most Democrats.” That said, notes the Times, inflation rates in the South and Midwest have, “in fact, been somewhat higher than elsewhere.”
Furthermore, those without a college degree are “more apprehensive” about rising inflation than college graduates, and probably unsurprisingly, the wealthy (who have financial tools to protect the value of their savings) are less concerned than the poor about increasing costs.
Where things now become tricky is in how the Fed approaches controlling inflation while still taking into account these varying consumer expectations; if people expect inflation to remain low, the Fed might do nothing. If the opposite is true, however, and people expect inflation to rise, the Fed might “bring down the hammer” in fear inflationary pressures will “get baked into everyday decisions.” Read more at The New York Times.