Americans are very worried about food and housing costs

Americans concerned about the state of the economy cite the price of food and the cost of housing as their top issues of worry, a Pew Research poll shows, at a time when close to a third of people in the country rate economic conditions as poor.

More than 90 percent of Americans say they are “very” or “somewhat” concerned about the price of food and consumer goods while 89 percent say the same about the cost of housing, according to Pew. These worries partly explain why more than 30 percent say the economy is poor.

Those feelings of worry come at a time when the U.S. has faced record high inflation that forced the Federal Reserve to institute aggressive rate hikes to their current two-decade high range of 5.25 to 5.5 percent. This has pushed up the borrowing costs of mortgages, auto loans and business investments.

Inflation has slowed from its peak of 9 percent in October of 2022. The consumer price index came in at 3.4 percent last month, a slight uptick from November’s read. A significant chunk of the increase came from housing costs, the U.S. Bureau of Labor Statistics (BLS) said.

“The index for shelter continued to rise in December, contributing over half of the monthly all items increase,” they pointed out.

Grappling with a housing market that is still unaffordable amid high mortgage rates and elevated prices is a factor that is also feeding into concerns about the economy.

While some economists point to the fact that unemployment is low, wages are higher, inflation has slowed, people are willing to spend and the economy is growing and likely to escape a recession, people’s outlook about the economy is shaped by how they feel about the high cost of living.

“For a lot of ordinary Americans that’s coming after a lot of price increases and so they’re still feeling the effects of inflation,” Carroll Doherty, director of political research at Pew Research Center, told Newsweek. “Even though the rate of inflation is slowing, people are still seeing high prices in various areas.”

Recent surveys have shown that there was evidence that with improving news, there has been an accompanying shift in the way people think about the economy.

The Pew poll, conducted with a sample of more than 5,000 U.S. adults between January 16 to 21, showed an uptick by 9 points to 28 percent among those who say economic conditions are excellent or good from a similar survey done in April. The survey also noted that people’s feelings about the economy were turning negative. Those who say economic conditions will be worse a year from now have declined to 33 percent from 46 percent.

“The overall public attitudes about the economy, which have been kind of flat for probably about two years now, are starting to show some improvement,” Doherty said. “It’s still rather low, but it’s it’s nine points up from where it was last April and that’s the first time we’ve seen a significant improvement in a while in economic attitudes.”

On Friday, data showed that Americans were still spending even as they were dipping into their savings to do that. Meanwhile, the personal consumption expenditures index, or PCE, which the Fed prefers to gauge inflation, was slowing down closer to its 2 percent target. This could lead to policymakers cutting rates sometime this year, which could buoy the economy and potentially improve Americans’ feelings about the economy.

“Consumer attitudes improved in December and early January, although their attitudes about the economy have not been a hurdle to spending,” Diane Swonk, KPMG’s chief economist, said Friday.

Part of the way Americans think about the economy is shaped by what the country has been through over the last three years.

“They reflect a complex mix of emotions, not the least of which includes the roller coaster of surviving a pandemic and the inflation that ensued,” Swonk added. “People don’t just want to regain ground lost to inflation. They would like to gain ground in their living standards; that takes time.”