Despite, the U.S. Federal Reserve remarked that the inflation will only be “transitory,” the New York Fed said in its latest Survey of Consumer Expectations that inflation is expected to be 4.8% over the next 12 months. This metric is the highest level recorded since 2013 and the perception of an American’s state of personal finances has degraded.
“Perceptions about households’ current financial situations compared to a year ago deteriorated, with more respondents reporting to be worse off compared to a year ago,” the report notes. The New York Fed’s survey adds:
“In contrast, respondents were slightly more optimistic about their households’ financial situations in the year ahead.”
American Are Borrowing More, Uncertainty Around Housing Market the Highest Ever
Consumers surveyed by the New York Fed also had shown that the rate of borrowing either one or more types of credit has jumped to 45% in February 2021 from 35% in October 2020.
“The increase was broad-based across loan types and credit score groups, although it was largest for mortgage refinance applications,” the Survey of Consumer Expectations report notes. Despite the rising number of Americans looking for credit, the overall rejection rate for credit jumped to the highest recorded rate since October 2018.
Meanwhile, as stimulus money has run out, schiffgold.com published a report on how “Americans are whipping out their credit cards.” The Federal Reserve data from the report shows that consumer debt jumped 10% in May and the report stressed that “Americans collectively now owe $4.28 trillion in consumer debt.”
The numbers stem from debt instruments such as student loans, credit cards, and auto loans. The data does not include mortgages and the report shows that consumer debt figures increased by $35.3 billion in May.
The economist Peter Schiff doesn’t believe the U.S. central bank will be raising interest rates anytime soon with the economy’s foundations solidified by borrowing.
According to Schiff:
“The reason that they are not going to fight inflation in the future is the same reason they’re not fighting it now — because they can’t do it without collapsing the economy”
The New York Fed’s latest Survey of Consumer Expectations also shows that Americans may be concerned about the U.S. real estate market as consumers disclosed that home prices will remain seeing a steady increase at 6.2% per annum, but doubtfulness surrounding that outlook was the highest the New York Fed survey has ever recorded.
Americans are noticing that there are buyers out there today trying to bid on properties they have never seen or visited. In April, 47% of the homes listed in the U.S. moved to pending in less than seven days.
Source: New York Fed Survey: Americans Expect Record-high Inflation – Fintechs.fi