As the highest U.S. inflation rates in four decades drive the costs of goods and services into record territory, Utah is among a group of Western states that has been experiencing the worst of those increases, particularly when it comes to paying for basic necessities like housing, groceries and gas.
While the latest federal report pegged average national inflation at 8.3%, the Mountain West states, which include Utah, continued to have the highest regional inflation in the country with the average prices of goods and services rising 9.8% in April, down from March’s 10.4% uptick.
Grocery costs were up 10.8% over a year ago, gasoline costs on average were up 43.6% over April 2021, and costs related to shelter rose 5.1% in the last year.
In an effort to rein in quickly escalating costs, the Federal Reserve has taken the first step in a planned series of rate hikes, increasing its benchmark lending rate by 0.5% earlier this month, the biggest hike in 22 years. The move reverses the previous two years of Fed policy that was mostly aiming to bolster a pandemic-ravaged economy, in part, by keeping interest rates near zero. Fed Chairman Jerome Powell said the increase, which is expected to be followed by additional 0.5% upward adjustments in the coming months, has a “good chance” of cooling down inflation-driven consumer price increases now running at 40-year peaks.
Now, a new Deseret News/Hinckley Institute of Politics survey finds while almost half of Utahns support the Fed’s actions to quell inflation, an overwhelming majority believes the strategy will fall short and are concerned an economic recession is still likely to occur in the coming year.
And, Utah Gov. Spencer Cox agrees.
The statewide poll of 808 registered voters was conducted May 7-13 and found 47% of respondents were in support of the Fed’s plan to raise interest rates to manage inflation while 38% opposed the strategy and 14% didn’t know. When it came to worries about a recession happening in the next year, 87% of poll participants said they had recession concerns, 11% said they weren’t concerned and 2% didn’t know.
The polling data, gathered by Dan Jones and Associates, has a margin of error of plus or minus 3.46%.
Last week, Powell told NPR news that the Fed’s tools to fight inflation were limited and external factors could play a big role in determining how effective, or not, the strategy will ultimately be in dampening inflation without propelling the U.S. economy into recessionary conditions.
“What we can control is demand, we can’t really affect supply with our policies,” Powell told Marketplace host Kai Ryssdal. “And supply is a big part of the story here. But more than that, there are huge events, geopolitical events going on around the world, that are going to play a very important role in the economy in the next year or so. So the question whether we can execute a soft landing or not, it may actually depend on factors that we don’t control.”
In comments made during his monthly KUED press conference on Thursday, Cox also noted exterior factors, like China’s COVID-19 policies and the war in Ukraine, have contributed to the rise of inflation and fall outside the control of U.S. policy makers. But, he also laid blame for record inflation on decisions made by President Joe Biden’s administration as well as the Fed itself, who Cox said may have simply waited too long to take action on inflationary conditions.
“Yes, the Fed is on the right path,” Cox said at his monthly PBS Utah press conference on Thursday. “Sadly, they took too long to get there.
“And it’s been exacerbated by other federal policies that shouldn’t have gotten us this far. And we pushed back on some of the what I believe ... is reckless spending and unnecessary spending by the Biden administration that has added at least two or three points (to inflation) and this is according to the Fed.”
Cox, like the majority of poll respondents, also shared his concerns that a period of declining economic performance, or recession, could also be in the offing in spite of the Fed’s efforts to finesse a strategy that cools the economy without moving it backward.
“Now the Fed has no choice but to increase rates,” Cox said. “And the sad part of that is what they’re doing is, it’s demand destruction. That’s all it is. They want to make it harder for people to borrow money to buy houses and other things. And that will help to curtail inflation.
“Can we avoid a recession? I certainly hope so. And any good economist would tell you though, that that’s very difficult to do. The tools that they have at their disposal are very blunt tools. And historically, they’ve never been able to quite get that right, where you increase it enough to decrease demand but not to send us into a recession. And so I think it’s very possible, with all of those other things that I just mentioned on the table in addition to the significant increases in interest rates, that a recession is possible.”
Earlier this week, Utahns talked to the Deseret News about their own strategies to navigate rising inflationary impacts including tapping savings accounts, modifying home menus and food shopping, and changing travel plans in an effort to keep household budgets intact.
And for some, getting through these tough economic times is about making the difficult decisions to do without.
For Tom Faircloth, 65, meat has become a luxury, reserved for one or two nights a week, or if family members or friends come over for dinner. Faircloth said he tries to visit the store only once every two weeks or so, and buys food items that can be used in a variety of dishes over the course of a couple of weeks.
“I think we’re buying less overall,” he said. “We’ll have soup and a grilled cheese or something like that. We just do simpler things. Where we might have cooked a meal and had mashed potatoes and gravy and the whole thing — we rarely do that or have family over for meals like that.”