Mixed signals about inflation concerns in the United States continue to emanate from federal policymakers, but the people of Utah are steadfastly united when it comes to what they think about rising costs as part of the ongoing economic recovery.
They are just worried.
A new statewide poll from Deseret News / Hinckley Institute of Politics found that 85% of Utahns said they were very or somewhat concerned about inflation. And among that group, 25% said the price hike would be “temporary” compared to 60% who believe inflation will be a “lasting” concern.
The results come from a poll conducted by independent pollster Scott Rasmussen of 1,000 registered voters in Utah from June 18-26. The poll has a margin of error of plus or minus 3.1 percentage points.
A series of increasingly dismal inflation reports in recent months is likely to fuel the fire with consumers who continue to pay more for goods and services in most categories.
Last month, the U.S. Bureau of Labor Statistics released data for May, a month that saw the biggest 12-month consumer price increase in 13 years. The 5.0% increase in May was the largest year-on-year increase since a 5.4% jump in August 2008. The news follows the 4.2% year-over-year price increase rate in April , which also topped the highest rates dating back more than a decade.
Economists generally believe that a nominal inflation rate of around 2% is a good thing for the overall economy, and key policy makers, such as the Federal Reserve board, continue to predict that increases current prices will be “transient”. While lending rate hikes can dampen inflationary pressures, Fed Chairman Jerome Powell said the central bank would not preemptively raise interest rates and “would wait for evidence of real inflation or other imbalances “. But, the minutes of a mid-June board meeting reflect some divergent views among members of the Fed’s governing body, according to a recent New York Times report.
So, are the Utahns’ inflationary concerns justified?
Phil Dean, former Utah state budget director and current public finance researcher at the University of Utah’s Kem C. Gardner Policy Institute, said he was not surprised by the results survey and noted that the wide media coverage of inflation issues likely played a role in the collective vision. But he cautioned that the current rates reported by federal agencies must be understood in context.
“These year-over-year numbers are comparisons to the worst months at the start of the pandemic,” Dean said. “The further we move away from the worst economic impact of the pandemic, the more relevant the comparisons will be. “
Dean also noted that consumer perceptions about inflation may themselves become a factor putting further downward pressure on the economy.
“The poll highlights one of my biggest concerns and that is people’s expectations for inflation,” Dean said. “These expectations can become guiding forces in economic activity. Consumers not only see what is happening with inflation today, but sometimes begin to project it into the future.
“This is where I get worried, when people expect future inflation and dramatically change their behavior.”
Wells Fargo senior economist Mark Vitner also looked at data from the Deseret News poll and said the Utahns’ concerns likely reflect how they are being affected by how quickly prices in certain categories have risen.
“It’s not really surprising to me that we are seeing this high level of concern,” Vitner said. “The rise in inflation has been sharper and larger than policymakers have suggested.”
Vitner said he didn’t expect inflation to approach the double-digit rates that rocked the U.S. economy in the late 1970s, but believes some of the factors that pushed up the Consumer goods prices – such as supply chain bottlenecks, labor shortages and surging demand – are expected to continue in the near term. He sees inflation higher than it has been in recent decades (just over 2% since 2000) and lasting for at least a few years.
The May report from the Bureau of Labor Statistics detailed the largest increases in consumer prices in the United States for energy products, including gasoline prices which have risen more than 50% from the previous year. last year. The used vehicle market also continues to be hot, with the average cost of a used wheel set 30% ahead of the same period in 2020. Overall, food prices have increased by 2.2%, but food purchased outside the home increased 4%. while groceries increased 0.7%.
The two economists pointed out that housing costs were one of the main factors of consumer worry about inflation, especially since housing and housing expenses typically make up around 40% of a household’s budget. housework.
Utah’s scorching housing market was examined in a recent and in-depth Deseret News article, highlighting record sales volumes in 2020 as well as unprecedented price increases.
In Salt Lake County, the median price of single-family homes climbed to $ 468,000 in the first quarter of 2021, up $ 68,000 or 17% from the previous year, when the median price was 400 $ 000. In Utah County, that price is $ 450,000, an even larger increase of 20% from the first quarter of 2020. In Davis County, that price is $ 430,000, in 21% increase. In Tooele County, it’s up to $ 360,000, up 18%. And in Weber County, it’s up to $ 340,000, up 23%.
Tenants are also affected.
In the Salt Lake metropolitan area, the median cost of rent rose from $ 1,384 per month in March 2020, when the pandemic first struck here, to $ 1,451 per month a year later, an increase 4.8%, according to a new report from Stessa.com.
Almost every year for the past decade, Utah rental prices have climbed 5% to 7% a year along the Wasatch Front, a startling reality that means the average Salt Lake County apartment that cost $ 793 in 2008 now costs about $ 1,145. .