The Fed sees its inflation fight as a success. Will the public eventually agree?

WASHINGTON (AP) — With its larger-than-usual half-point cut to its key interest rate last week, the Federal Reserve underscored its belief that it’s all but conquered inflation after three long years.

The public at large? Not so much.

Consumer surveys, including one released Friday by The Associated Press-NORC Center for Public Affairs Research, show that most Americans remain unhappy with the economy, still bruised by an inflation rate that hit a four-decade high two years ago as the economy rebounded from the pandemic recession.

Yet in the view of some economists, the shift toward steadily lower borrowing rates could eventually boost consumer sentiment. Inflation has sunk for more than two years and is nearly back down to the Fed’s 2% target. Though that means overall prices are still rising, they’re doing so much more slowly.

The costs of some high-profile consumer goods, from used cars to grocery prices, have actually been falling. Economic history suggests that a low, stable inflation rate, with prices rising only gradually, eventually leads Americans to adapt to higher price levels. One favorable factor is that average incomes are now rising faster than prices, allowing more households to afford necessities.

The issue remains a heated one in the political campaign. Seeking to capitalize on public discontent, former President Donald Trump has blamed the Biden-Harris administration’s policies for having caused inflation to spike. Yet Friday’s AP poll found that voters are now roughly split on who they think would better handle the economy, Trump or Vice President Kamala Harris. Back in June, an AP poll had found that six in 10 disapproved of President Joe Biden’s economic record.