Four observations about American public opinion and inflation:
1. Worry about inflation has now risen to the point where it is perceived by Americans as the top problem facing the nation.
As my Â鶹´«Ã½AV colleague Jeff Jones recently reviewed, mentions of inflation as the most important problem facing the nation averaged only 1% between 1990 and 2021. But such mentions zoomed to 18% in our latest May Â鶹´«Ã½AV poll. Inflation is thus now essentially tied with issues relating to the way the nation is being governed as the top problem facing the nation.
In April, we asked Americans about their personal financial situation. Inflation dominated Americans' thinking. Almost a third (32%) said inflation or the high cost of living was the most important financial problem facing their family. Another 10% mentioned the price of gas or energy. These were far and away the most frequently mentioned issues. A year ago, by contrast, only 8% of Americans mentioned inflation and 1% mentioned gas prices as their family's most urgent financial problem.
Every other recent survey I've reviewed reflects the same pattern. A just-released Quinnipiac University poll shows that Americans are much more likely to say inflation is the most urgent issue facing the nation today than any of the 10 other issues listed, including gun violence, Russia/Ukraine, climate change, COVID, immigration, racial inequality and abortion. Pew Research's April-May survey in similar fashion found 70% of Americans saying inflation is a very big problem, at the top of a list of 12 issues -- including healthcare costs, violent crime, the federal deficit and climate change. An April-May poll conducted by Ipsos for FiveThirtyEight found Americans were much more likely to say inflation is "among the most important facing the country" than any of the 17 other issues listed.
These perceptions don't arise out of thin air. "Hard" economic data confirm that inflation is as high as it has been in decades. And Americans don't need to be highly trained economists to observe the rising price of gas. Or rising prices when they check out at the grocery store.
A recent Wall Street Journal poll asked Americans how concerned they are about the impact of the rising prices of eight different items. Americans are most concerned about the higher-than-usual prices for gas and groceries -- the only two items about which more than half said they were extremely or very concerned.
Bottom line: Inflation has become a significant concern for many Americans, driven in part by the highly visible rising costs of gas and groceries.
2. Americans' perceptions of inflation as the top problem facing the nation are significantly lower than in times past.
The FiveThirtyEight/Ipsos poll included an interesting question asking Americans to mark this statement as true or false: "Inflation is higher now than it has been any time since World War II." Slightly over half of Americans said this was true. Most of the rest said they didn't know.
In fact, the statement is false. Economic data show that inflation has been much higher at a number of other points in time in America's history. And Americans' perceptions of inflation as the nation's top problem have also been higher in the past. As Jeff Jones noted in his recent review, over half of Americans mentioned inflation as the nation's top problem in a Â鶹´«Ã½AV survey conducted in 1981. Â鶹´«Ã½AV trends are less clear before that point due to changes in coding over the years, but most likely the numbers were equally high or higher in the high-inflation era of the 1970s.
So, while inflation is clearly seeping into Americans' consciousness today as a major problem, it is not as salient an issue as it was at previous points in our nation's history.
3. Views of inflation as the top problem are accompanied by very negative overall economic confidence ratings.
Â鶹´«Ã½AV's Economic Confidence Index is among the lowest measured since the end of the Great Recession in 2009. It is particularly low in contrast to the much more economically positive years just before the pandemic. Correlation is no proof of causation -- but it seems reasonable to assume that worry about inflation is a significant part of these dampened economic perceptions. This conclusion is reinforced by Â鶹´«Ã½AV's April update showing both that Americans are less positive about their personal financial situation than in past years and that Americans name inflation as their biggest personal financial problem.
As a more specific example, the recent Wall Street Journal poll showed that only 13% of Americans say it is a good time to buy a home -- negative views driven at least in part by rapidly increasing home prices in most parts of the country.
Â鶹´«Ã½AV data show that almost six in 10 Americans own stock, and the stock market has been down significantly this year. Only 21% of Americans in the Wall Street Journal poll said it is a good time to invest in the stock market. The drop in stock prices is in part a result of investor worry about inflation.
At the same time, Americans have low economic confidence despite their very positive feelings about the employment situation in the country. As my colleague Megan Brenan recently reviewed, Americans overwhelmingly say now is a good time to find a quality job. Further, over six in 10 employed Americans say if they are laid off, they will be able to find a job just as good as the one they have now. And, more importantly, workers overwhelmingly say it is not likely that they are going to be laid off in the first place. Along these same lines, the Wall Street Journal poll showed that 71% of Americans think it is a good time to "look for a job."
4. There's not a lot of direction from the American public on what can be done to address inflation.
As discussed above, average Americans are acutely aware of the impact of inflation in their daily lives, given their regular confrontation with the rising prices of gas, groceries, and other goods and services.
But looking to Americans for direction on what should be done about inflation is a more complex undertaking. The economy is vastly complicated. Economic conditions, including inflation, are the result of many crosscurrents and forces. There are many actors involved. Inflation, in other words, defies easy comprehension and easy solutions.
If it were easy for government experts to understand exactly how to maintain a booming economy with high employment and low inflation, we would never have recessions. And if investors understood exactly what was happening and going to happen in the economy, they would all be rich.
So, it may not be surprising to find there isn't a lot of current research measuring what Americans think is causing inflation or what they want to be done about it.
There is some interesting history on this issue. President Gerald Ford in 1974 attempted to enlist Americans' cooperation in curbing inflation, including his introduction of the famous WIN ("Whip Inflation Now") button. Given this effort by Ford to involve the public in voluntary actions to control inflation, Â鶹´«Ã½AV appropriately enough asked Americans a series of questions about their willingness to engage in such activities. Overwhelming majorities in Â鶹´«Ã½AV's October 1974 poll agreed they would be willing to "buy more basic foods and less packaged and processed foods," "set the thermostat in your home at 68 degrees," "reduce the use of your car(s) by 10%," "save money each week by giving up some things for which you now spend money," and "work harder with the goal of increasing your personal productivity by 10%." (All of this was apparently in vain; the WIN program faded away quickly and wasn't heard from again.)
President Joe Biden has released his own program for whipping inflation. But none of his suggestions are aimed at getting Americans to voluntarily save more and spend less. They instead focus on such things as releasing oil from the strategic reserves, providing clean energy and vehicle tax credits, addressing supply chain issues, and lowering healthcare costs. I think it's fair to say that most Americans approve of these types of actions, at least in principle.
An interesting CNBC poll conducted in April found that Americans rated three of the six tested issues as "major causes" of inflation and increasing costs. These were the closing of businesses and disruption of supply chains as a result of COVID (69% major cause), corporations taking advantage of the situation to raise prices (66%), and Putin's invasion of Ukraine (55%). Slightly less than half said Biden's policies were a major cause (49%), with lower percentages blaming Federal Reserve policies (31%) and the policies of former President Donald Trump (28%).
A poll sponsored by the T.H. Chan School of Public Health at Harvard University recently found that 62% of Americans say continued federal spending on COVID will lead to increased inflation. An NBC News poll showed that 69% of Americans would be more likely to vote for a candidate who wants to control inflation by reducing the deficit and that 64% would be more likely to vote for a candidate who wants to control inflation by taxing large corporations.
These scattered results suggest that Americans would like to see their elected representatives throttling back on federal spending as a way to control inflation. And, as documented by a number of other polls, Americans consistently favor increased taxes on corporations.
There is also the question of who Americans believe is most responsible for controlling inflation. An April poll from Axios/Ipsos showed that 9% of Americans strongly agree that the Federal Reserve has the power to control inflation (another 56% somewhat agree). A poll from Quinnipiac showed that 29% of Americans say a president has a lot of control over inflation, with 38% saying a president has some control. These questions indicate that Americans aren't sure that either the Fed or Biden is positioned to quickly and effectively quell inflationary pressures.
Nevertheless, the president usually gets credit when the economy does well and gets criticism when it does not, regardless of the reality of the situation. At the moment, as we would expect, Biden is getting poor ratings for his handling of the economy. A recent ABC News/Ipsos poll showed Biden's ratings on handling inflation and gas prices are well below his overall approval rating in the same poll. Similarly, a May NBC News poll had Biden's rating for handling the cost of living as below his overall rating.
Bottom Line
The economy is always an important issue driving Americans' voting behavior. It no doubt will be again in this fall's midterm elections. Americans' negative view of the economy overall, and their concern about inflation specifically, will most likely work to the benefit of the current "out" party and thus help Republican candidates. The Biden administration will at the same time be attempting to position itself as working to mitigate the negative impact of inflation. For example, The Wall Street Journal just this week reported that Treasury Secretary Janet Yellen is working hard to "limit Moscow's energy revenue and keep Russia's supplies flowing to prevent a recession." Existing public opinion data suggest that any and all such efforts will be welcome by the American public.
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