By Nathalie Voit
A 91-page report from the Federal Reserve released on May 23 found perceptions about the state of the national economy began deteriorating in the latter half of 2021, well before rapidly accelerating inflation kicked in this year.
According to the Fed’s annual Economic Well-Being of U.S. Households report, just 24% of U.S. adults rated national economic conditions as “good” or “excellent” last year. This was down from a 26% rating in 2020 and nearly half the rate observed in the pre-pandemic period of 2019.
Ratings of local economic conditions also fell sharply from pre-pandemic levels despite rising over the short-run. While 63% of U.S. adults rated their local economies as “good” or “excellent” in 2019, just 43% said the same one year later. That figure slightly increased to 48% in 2021.
The study shows dissatisfaction with economic conditions preceded the bouts of severe inflation that came to characterize 2022. Although inflation worsened in the second half of 2021, it was not as extreme as the price surges that dominated the national conversation this year.
November 2021 saw the beginning of a series of red-hot inflation readings, with consumer prices culminating at a 40-year peak of 8.5% in March 2022, according to Labor Department data. However, the findings in the report were based on responses gathered between October and November of 2021, before explosive inflation set in.
The results arrive despite positive ratings on self-reported measures of financial well-being, which increased the most since the survey began in 2013.