By Alice Seeley
On Aug. 8, The Federal Reserve Bank of New York’s Center for Microeconomic Data released its monthly Survey of Consumer Expectations report, which showed consumers believe inflation will stop increasing in the U.S. The news comes after the Federal Reserve raised interest rates four times this year to combat inflation.
Expectations for inflation in America one year ahead fell dramatically last month to 6.2% from 6.8%. Three years ahead expectations declined from 3.6% to 3.2%. This is the second month in a row expectations have dropped, yet these numbers remain historically high.
Although consumers are optimistic about inflation decreasing in the upcoming years, most consumers are spending less at restaurants, and consumers’ confidence in the housing market is at its lowest since 2011. According to the U.S. Department of Labor, restaurant prices rose 7.7% in the past year. This year’s second quarter report showed that restaurants had fewer sales than in the first quarter. However, Americans are not cutting back on coffee, according to Starbucks’ CEO Howard Schultz. Schultz stated that Starbucks had not seen a decrease in sales this quarter.
According to Fannie Mae’s monthly survey, consumer confidence in the housing market is the lowest in 11 years. Only 17% of Americans believe now is a good time to buy a house, down 3% from June. Those who think it is a good time to sell fell from 76% to 67%.
“Unfavorable mortgage rates have been increasingly cited by consumers as a top reason behind the growing perception that it’s a bad time to buy, as well as sell, a home,” Fannie Mae’s senior vice president and chief economist, Doug Duncan, said.
The average 30-year fixed mortgage started at 3% this year and is currently around 6%.
