“The financial markets and traders are very good at what they do, but I’m concerned about how much exuberance there has been and how that seems to be very out of touch with how most Americans are feeling about the economy today,” said Tyler Schipper, an associate economics professor at the University of St. Thomas. “And that juxtaposition, I think, worries me, given how much of the driving force in the U.S. economy has been consumers spending despite how they feel about the economy.”
The consumer price index (CPI), which measures the change in prices consumers paid for goods and services, reached a 40-year high of 9.1% in June 2022. The Fed raised interest rates in response, reaching a 22-year high in July.
Inflation has since declined, prompting the Fed to ease off the gas. The CPI increased 3.1% year-over-year in November, down from 3.2% in October and 3.7% in September. Grocery prices are expected to fall in 2024, according to U.S. Department of Agriculture estimates released Thursday that showed a midrange price drop of less than 1%, though the range of estimates also includes the possibility of food prices rising or falling roughly 5%.
Meanwhile, the unemployment rate has remained below 4% for 22 months, a stretch not seen in half a century.
“We have a fantastic labor market, we have rapid disinflation, and we have wages that are starting to pick up and keep pace with inflation again, and this massive wave of worker organizing and strikes and bargaining, and all of those are really great signs for American workers and families,” said Kitty Richards, a former U.S. Treasury official and senior strategic adviser to the nonprofit Groundwork Collaborative.
