It’s often said that Americans agree on almost nothing these days, a sign of the times. But that’s not entirely true. There’s one topic on which there’s near-unanimous agreement: Inflation. Americans of all political persuasions expect prices to shoot up over the next year.
The data are unequivocal: In our November I&I/TIPP Poll, 84% said “over the next year prices for gasoline, food, and other household products” would be “much higher” or “somewhat higher” than today. Only 8% thought they’d be lower, while 5% weren’t sure.
The big surprise comes from those who expect “much higher” prices (48%), compared to those expecting only “somewhat higher” prices (36%). Clearly, many people are preparing themselves for a slog against ’70s-style inflation at least for the next year.
These numbers come from November’s I&I/TIPP Poll of 1,306 adults, which was conducted online from Oct. 27-29 by TechnoMetrica Market Intelligence, I&I’s polling partner. The margin of error is +/-2.8 percentage points.
The I&I/TIPP data come during a raging policy debate among economists and pundits over whether current extreme gains in inflation mark the start of a long-term price rises, or just a “transitory” increase in response to recent government and Federal Reserve stimulus.
Inflation, as measured by the year-over-year monthly increase in consumer prices, has been surging since April of this year, when it jumped to 4.2% from the first quarter’s average rate of just 1.8%. At the time, many experts surmised it was “transient” or “temporary.”
However, since then, it’s move up sharply. Indeed, for the five months following April, all the monthly gains from the year before were 5% or higher. In October, prices surged 6.2%, a 30-year high, exceeding even already-gloomy forecasters’ predictions. That compares with the average 1.9% annual CPI rate that prevailed during President Donald Trump’s four years in office.
Recent headlines show how widespread inflation fears are today:
- Holiday shoppers are grappling with rising prices as inflation takes its toll: ‘Everything seems more expensive’ — Philadelphia Inquirer
- Inflation-Pinched Shoppers Are Turning to Discount Stores Ahead of the Holidays — Bloomberg
- Inflation: is now the time to get worried? — Financial Times
- Thanksgiving dinner cost jumps with inflation on the menu — Reuters
Even so, I&I/TIPP data show, there are some differences in how people view the severity of the coming inflation.
Among Republicans, for instance, fully 68% felt inflation would be “much higher,” compared to only 24% who thought prices would rise “somewhat” from where they are now. Just 37% of Democrats, by comparison, believed inflation would be much higher, while a plurality of 44% said it would be only somewhat higher.
As for those describing themselves as “independent/other,” they’re more in tune with the Democrats: 45% expect much higher gains in prices, while 39% see more moderate increases.
Another interesting divergence comes among different age groups. All expect higher prices over the next year. But the older one is, the more pessimistic one is. The numbers show a lock-step increase.
For those 18-24, 71% expect higher prices next year; the 25-44 year-olds are at 78%; those aged 45-64 stand at 87%; but those 65 and over come in at 94%.
Is it just that the older people remember the 1970s’ traumatic inflation? Or that many if not most of them are living on fixed incomes? Are younger people marginally more optimistic because they have more years to make up for any potential income losses due to higher-than-anticipated inflation?
It’s hard to say. But it’s clear that, across the country, as prices surge for everything from housing and cars to Thanksgiving turkeys and clothing, Americans are feeling the pinch.
Whether inflation turns out to be a short-term blip on the long-term time horizon, consumers are getting their first taste of sustained price increases since the early 1990s. Back then, Fed rate hikes quelled nascent inflation pressures, but also pushed the economy into a recession that many believe cost President George H.W. Bush a second term in the 1992 presidential election.
Some worry the Fed will again slam the brakes on the economy this time by ending its own decade-long “stimulus” of bond buying and ultra-low interest rates. Whether it does or not, current inflation over 6% is way over the Fed’s long-term target of 2%.
Even some top Democratic Party economists now warn about the inflation danger, brought about, they say, by too much government “stimulus” at a time the economy doesn’t need it.
As Issues & Insights noted recently, Larry Summers, former Treasury secretary in the Clinton administration, warned all the way back in February about the risk that “macroeconomic stimulus on a scale closer to World War II levels than normal recession levels will set off inflationary pressures of a kind we have not seen in a generation, with consequences for the value of the dollar and financial stability.”
Other former Democratic White House officials have also recently sounded off about the dangers of inflation from too much spending, including former Obama economic advisers Steven Rattner and Jason Furman. Inflation is now a bipartisan concern.
I&I/TIPP will keep providing informative data from our monthly polls in the coming weeks and months on this topic and on others of interest to Americans. TIPP has distinguished itself by being the most accurate pollster for the past five presidential elections.
Terry Jones is an editor of Issues & Insights. His four decades of journalism experience include serving as national issues editor, economics editor and editorial page editor for Investor’s Business Daily.