Before the latest monthly inflation reading, consumers were still dealing with the price shock for everyday goods and services – and lingering uncertainty about the economy.
The pace of consumer price growth was expected to remain practically unchanged in September, according to Dow Jones estimates.
Although costs have normalized, America continues to adjust to prices that are, on average, 21% higher than at the beginning of 2020, with some goods and services rising even higher.
Higher costs are one of the main concerns of voters preparing for the November elections. Former President Donald Trump tried to link vice president and Democratic presidential candidate Kamala Harris to the increase, accusing her of standing by while the Biden administration approved spending that he said helped fuel inflation.
But economists remain uncertain about how much the fiscal stimulus affected inflation, with many suggesting that supply chain issues and changes in consumer behavior played an equal or greater role.
Trump has not proposed a detailed economic plan beyond proposing a comprehensive set of tariffs that he says will boost employment and increase revenues — results that many economists consider controversial.
For her part, Harris proposed measures that include limiting incomes and increasing food prices, policies whose effectiveness – let alone their ability to be approved by legislators – has also been questioned by some analysts. There is Harris The gap narrows Some polls show that presidential candidates have better results on economic issues, but Trump still leads in this metric.
While candidates from both parties agree that prices are hurting everyday consumers, the country is also widely divided on opinions about the state of the economy. According to the most recent University of Michigan Consumer Survey, Republicans' assessments of the current economic situation are at historic lows, while Democrats' views are nearly three times as favorable.
The Biden-Harris administration is benefiting from a tailwind in the form of minimal increases in gasoline prices: compared to the same period last year, the average price of a gallon of gas is about $0.50 lower . According to AAA. Prices may start to rise again amid the unrest in the Middle East that has already sent oil prices soaring, but for now, one of the most accessible signs of rising prices remains muted.
Analysts generally agree that this is a sign that the economy is on solid footing, at least according to the data. Current inflation numbers could dampen Wall Street's expectations of a cut in interest rates at the next Federal Reserve meeting in November. Following an unexpectedly strong jobs report last week, traders have all but eliminated the odds of another half-point cut, and the odds of no cut have risen to more than 1 in 5 by Thursday.
However, there are important questions about the direction the economy is taking. In its latest reading, the National Federation of Independent Business, which represents small business owners, saw its uncertainty reading reach an all-time high.
“Uncertainty makes owners hesitant to invest in capital expenditures and inventory, especially as inflation and financing costs put pressure on their bottom line,” said NFIB economist Bill Dunkelberg.
“While there is some hope for the holiday selling season, many Main Street owners question whether business conditions will improve in the future,” he said.
