Consumer Expectations for Inflation Saw Their Biggest Jump in Years — What That Could Mean for Your Wallet
Written by
Travis Woods
Edited by
Amber Barkley
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Despite the fact that many Americans returned President Donald Trump to the White House based upon his promise to slash the steep Biden-era inflation rates, a recent survey from The Conference Board indicated the U.S. consumer confidence plummeted in February as pessimism about America’s economic future came roaring back.
The study found that consumers’ perceived likelihood of an American recession over the next year rose, while their confidence in the economy’s future and in the labor market fell sharply in February.
America hasn’t experienced a spike in expectation of inflation this high since 2021, with the fear of increased inflation reaching all income brackets and age groups polled.
Next, learn what may actually start getting cheaper.
Why the Lack of Confidence in the Economy?
Per The New York Times, Americans are shaken by the projected impact of Trump’s tariff policies and the skyrocketing prices of such basic amenities as eggs at the grocery store.
Trump’s somewhat bullish insistence on tariffs — which could result in at least short-term increases in prices for many retailers and grocers — has shaken the confidence of both businesses and shoppers, while already-high grocery prices continue to rise.
How Could This Expectation of Inflation Impact You?
An important part of controlling inflation rates is to control the expectation of inflation rates.
Why? When Americans expect inflation to rise, a self-fulfilling prophecy comes into play: People spend less in anticipation of higher prices and the economy dips; businesses expect labor and material costs to rise and raise their own prices as a result; and workers expect the cost of living to increase and demand raises. All of these factors then cause inflation to precipitously increase.
As a result, the fears of inflation can actually force inflation to happen — forcing you to spend more at the grocery store, or spend more for a new car, or pay more for a new home. The expectation of heightened inflation rates could cause you to spend more to gain less.
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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