Economists and Consumers Expect Inflation to Persist
July 12, 2021
Economists are warning that Americans should brace for prices to continue their climb. In the Wall Street Journal’s most recent monthly economist survey, the broad consensus was that inflation would be higher and more long-lasting than previously thought.
The respondents on average expect inflation, excluding the volatile food and energy components, to be up to 3.2% in the fourth quarter of 2021, before receding to roughly 2.3% annually in both 2022 and 2023. If their forecast proves true, inflation would average 2.58% between 2021 and 2023, the highest level since 1993.
Consumers also expect inflation to stick around, according to a recent survey from the Federal Reserve. The June Survey of Consumer Expectations found that median inflation expectations over the next 12 months jumped to 4.8%. That is a 0.8% increase from May and the highest ever reading since the survey began in 2013. Over the next 3 years, consumers expect inflation to average 3.6%, well above the 2% target set by the Fed.