Economy

NY Fed Report Finds Economic Optimism Up In May

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Americans are becoming slightly more optimistic about the economy after months of pessimism due to the coronavirus pandemic, The Wall Street Journal reported, although many families are hesitant about possible inflation forcing food and gas costs higher than before.

A report from the Federal Reserve Bank of New York on its May Consumer Expectations found that the population was “more optimistic about labor market outcomes with earnings growth, job finding, and job loss expectations all slightly improving,” although the numbers were still far lower than they had been before the pandemic started.

That report comes on the heels of an unexpectedly bright May jobs report, which found that payrolls were increasing as parts of the country are opening back up for business. Many people don't have as grim an outlook on the unemployment rate in the next year, with less expectation of losing a job, the survey said, and more people thought they'd be able to find work now as compared to March and April.

Many people are still “depressed” about their personal finances, however, the New York Fed found, with around half of respondents reporting difficulty getting credit.

And people are nervous about possible inflation for things like food and gas, with people predicting 3 percent inflation a year from now. That number is up from 2.6 percent in April, the Consumer Expectations report said, and people are reportedly stressed and uncertain about potential rising prices to come due to the pandemic's disruptions of the economy.

Expectations for inflation three years from now has held steady at 2.6 percent, though.

The Fed has maintained thus far that inflation will stay low, but expectations about inflation could signal that price pressures are less stable than previously thought, the news outlet reported.

The unemployment rate has proven people's optimism to be not without merit as it fell to 13.3 percent, but that number might not hold. A recent PYMNTS report found that much of the gains are due to the Paycheck Protection Program (PPP), the support of which is finite. After the money runs out, the economy could still prove fragile.

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NEW PYMNTS STUDY: LEVERAGING THE DIGITAL BANKING SHIFT – SEPTEMBER 2020  

The September 2020 Leveraging The Digital Banking Shift Study, PYMNTS examines consumers’ growing use of online and mobile tools to open and manage accounts as well as the factors that are paramount in building and maintaining trust in the current economic environment. The report is based on a survey of nearly 2,200 account-holding U.S. consumers.

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