(The Center Square) – Two out of every three Americans fear inflation will be worse in 2023 than it was last year, prompting nearly 90% of respondents overall in a new WalletHub survey to admit they are now concerned about the issue.
The Fed Rate Hike Survey was conducted online over a five-day period beginning Jan. 9. Researchers found that 70% of Americans now fear a recession is inevitable with 45% admitting they are not financially prepared for such a downturn.
"People are still seeing high prices for everything and are still getting high utility bills,” WalletHub analyst Jill Gonzalez told The Center Square. “This is what makes the pessimism regarding inflation persist. Plus, as long as the war in Ukraine continues and if the job market starts showing signs of deceleration, people will still have economy-related anxiety."
With the Federal Reserve widely expected to continue raising its target rate by 25 basis points on Feb. 1, Gonzalez said the federal government is doing what some would expect to slow rising prices.
"There are only a few ways to keep inflation under control,” she added. “The most used and popular method – due to its effectiveness – is reducing the money supply by increasing interest rates. This is what the Fed is currently doing as it makes credit more expensive and reduces both consumer and business spending."
With the projected impact stemming from the latest rate increase expected to cause credit card, mortgage and car loan rates to all further rise, nearly 9 in 10 people now say that inflation will impact their spending in 2023. To date, 70% of respondents list groceries as the monthly expense most impacted by the climate.
Gonzalez said no one can be sure about when relief might be coming.
"That is very difficult to predict at this point,” she said. “It's still early in the year, and we have yet to see how the economy responds to the Fed's recent rate hikes. However, we do expect that towards the end of the year the situation will begin to improve, and we'll even see a couple of rate cuts from the Fed."