By Scout Nelson
Inflation remains one of the most closely watched measures of economic performance in the United States. Despite recent signs of improvement, concerns continue among consumers, policymakers, investors, and economists.
One major reason is the lasting impact of past price hikes. A University of Michigan survey showed that consumer sentiment remained low in May, holding at 52.2, which is among the lowest readings since 1952. People still expect inflation to rise, predicting a 6.6% increase over the next year. Much of this fear comes from the possibility of increased tariffs raising prices again.
The Federal Reserve aims to keep inflation around 2%. In April, the Consumer Price Index showed annual inflation at 2.3%, down significantly from the 9.1% peak in June 2022. However, even with inflation closer to the target, the Fed has been cautious about lowering interest rates. Officials fear that cutting rates too soon may cause inflation to rise again.
Food and fuel are the most noticeable sources of inflation for many people. In April, food prices rose 2.8%. Eggs stood out with a sharp 49.3% increase, while beef rose 8.5% due to limited supply and strong demand. In contrast, gasoline prices fell by nearly 12%, and fresh fruits and vegetables dropped by 2.9%.
Despite falling inflation and a still-low unemployment rate of 4.2%, economic signals are mixed. The economy shrank in the first quarter, bond yields increased, and job growth slowed in May. These mixed messages, along with uncertain policies on trade, taxes, and spending, continue to affect public confidence.
To restore economic security, both stable prices and clear government policies are needed. Until then, inflation will likely remain a key concern for all.
Photo Credit: nebraska-farm-bureau
Categories: Nebraska, Business