Inflation is at a 40-year high, and the vast majority of Americans think it's going to get worse.
According to the latest data from the Bureau of Labor Statistics, consumer prices rose 7% over the 12 months ending in December 2021, marking the largest increase in inflation since 1982. The high inflation rate was driven by major price spikes in a few key areas, including: used car prices (37% increase), energy — including electricity and gasoline (29% increase) — and food (6.3% increase).
Consumers aren’t optimistic about where things are heading next. According to new research from Gallup, 79% of Americans expect inflation to increase over the next six months. For the past 15 years, it's been fairly standard for only about 60% of Gallup poll participants to think that inflation would rise in the near future.
“In the past, Americans have always been more likely to say inflation will increase rather than decrease, but the current expectation is higher than usual — in fact, it is the highest Gallup has measured,” the report states.
Inflation is taking a toll, too. In phone interviews with a random sample of more than 800 Americans, Gallup asked, “Have recent price increases caused any financial hardship for you or your household?”
About half (49%) said yes. Of those, 40% said they’re experiencing “moderate hardship” and 9% reported “severe hardship.”
In the same interview, Gallup asked about the economy more broadly. Two-thirds (67%) of Americans said economic conditions are “getting worse.”
While Americans are feeling pretty pessimistic about the economy as a whole, there is an upshot: the labor market. About three-quarters of Americans think it’s a good time to get a quality job, Gallup reports.
Wages have also been increasing in many areas, especially for minimum wage workers and service employees. At the beginning of this month, 21 states introduced minimum wage hikes.
Many major employers, including Bank of America, Costco, CVS, PNC Bank, Southwest Airlines, Target, Wayfair and others, have recently announced (or already implemented) minimum wages of $15 or higher.
Likewise, starting Jan. 30, the minimum wage for all federal employees will jump to $15, affecting approximately 67,000 workers who currently make less than that.
Meanwhile, even after years of advocates calling for a federal minimum wage increase to $15, it remains frozen at $7.25 an hour. It’s been at that level since July 2009. Had it increased at the rate of inflation, the federal minimum wage would currently be $9.39.
In effect, not only have federal minimum wage workers not received a raise in nearly 13 years — thanks to inflation, the buying power of their wages have decreased by $2.14 per hour.