Following its January meeting, Federal Reserve Chairman Jerome Powell said the monetary body is confident that inflation is headed in the right direction, but not enough to start reducing its federal funds rate, currently parked at its highest level in over two decades.
The Fed’s Open Market Committee voted Wednesday to leave its benchmark rate unchanged, but Powell signaled that reducing the current rate of 5.25% to 5.5% is still likely to happen sometime this year, though it will probably be later than the Fed’s next meeting in March.
“We have confidence,” Powell said. “We’re looking for greater confidence that inflation is moving down to 2%. It seems to be the likely case that we will achieve that confidence.”
But while Powell and the Fed’s board of governors are waxing bullish about the direction of the U.S. economy, new polling by the Deseret News, in partnership with the University of Utah’s Hinckley Institute of Politics, shows Utahns are feeling a bit less confident about their collective fiscal prospects moving forward.
When asked, “Looking ahead, how are you feeling about the economy in the coming year?” 52% of respondents said they were somewhat or very pessimistic, 43% reported being somewhat or very optimistic, and 6% said they didn’t know.
And in a follow-up question asking poll participants how concerned they currently are about inflation, 87% said they were somewhat or very concerned, 11% said they were not very or not at all concerned, and 2% weren’t sure about their feelings.
Republican poll participants were less optimistic than Democrats in their feelings about the economy in the coming year, 39% to 54%, respectively, and more concerned about inflation, 89% to 77%.
The statewide survey was conducted Jan. 16-21 of 801 registered Utah voters by Dan Jones & Associates. The data has a margin of error of plus or minus 3.02 percentage points.
Poll participant and Salt Lake City resident Katherine Sullivan counted herself among those who are feeling mostly pessimistic about where the economy is headed and the impacts of ongoing inflation.
“I kind of feel like once we’re in an inflationary mindset, we don’t see any price drops until we get into a glut,” Sullivan said. “Eggs were up to $8 a dozen, a ridiculously high price that was supposedly due to avian flu outbreaks. Then people just stopped buying them. ... Now you go to the store and they’re back to a more reasonable price, but still higher than they were before the shortage.”
Sullivan said she worries about how the cost of housing has skyrocketed in Utah, along with interest rates, and is now a challenge facing her six children who are grown up and on their own.
“In Utah, our incomes are lower and our cost of living used to be lower,” Sullivan said. “But our wages haven’t not gone up in relation to how much you now have to pay for a house here.”
She is also concerned about growing international conflicts and how that could impact the overall U.S. economy.
“I’m worried, and everyone should be, about getting into more trouble in the Middle East,” Sullivan said. “Some people say war is good for the economy, and maybe that’s true for people with a lot of investments, but not sure if it is a good thing for the average person in Utah.”
In the poll, respondents with lower incomes were more down on the economic outlook than those with higher incomes. Younger residents, too, expressed more pessimism than older residents.
But even as most Utahns, like Sullivan, are feeling gloomy about inflation and economic prospects in the year ahead, Powell’s comments about the nation’s fiscal track were tinged with guarded optimism.
“Core inflation is still well above target on a 12-month basis,” Powell said. “Certainly, I’m encouraged and we’re encouraged by the progress, but we’re not declaring victory at this point. We think we have a ways to go.”