POWER ECONOMICS
The inflation outlook for consumers has fallen from a record high
Since 1981, the highest level has been recorded of 12 month inflation at 8.5% in March this year. Recently. Fed raised a benchmark interest rate by half a percentage point which is the biggest hike in 22 years, and it is the second increase in the year. American people are still concerned about the high cost of living where the household spending is forecasted to move high 8% over the next year, as revealed by the New Fed Survey. This is a 0.3% point high from last month. In a Monday morning interview, president Neel Kashkari told CNBC that they have their job to do and have to bring inflation back down. Additionally, home prices that were expected to rise are not going to change, and people will spend more on the household. However, oil prices were lower by 4.4% in April, and the gas price fell by 5.2%, which is optimistic for the customers. 12 | JUNE 2022
The inflation rate has greatly affected the real estate sector, where household demand has continued to move up and the house price. The mortgage rate is also high, moving homebuyers out of the market. The cost of living is also much high for most residents, which is becoming unbearable for most people. As a result, people are moving from expensive high homes to less expensive houses which are affordable to them. The migration rate has also increased as people seek an alternative way to bare with the current situation. However, as the demand increases, household sellers are keeping the pace to grasp more profit in this season, which seems not to last long. During high inflation home, buyers tend to reduce in the market because of the unaffordable prices and household supply increase. Home prices are expected to continue rising as demand and construction costs increase, and people need to dig deeper into their pockets. People are looking for side hustle jobs to top up their income and slowly get back into the market to overcome the current problem. Inflation is also expected to move back like it was before. As president Neel Kashkari said, people will be back in the market as it was before.
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n April 2022, a federal reserve survey revealed that customers expect the best in all possible ways about inflation. However, customers are still expecting to spend more this year compared to the past years. Compared to June 2013, there is a decrease of 0.3 percent from the March record, which was quite high. Inflation fell to a median of 6.3% expectation over the next year, and now it is at a 0.3 percentage point.
