'Even more concerning are new signs that families have lost faith in the Fed’s policies .. most Americans expect inflation to worsen and are adjusting their spending habits, a mind-set that can make the surge in prices even worse.''The Federal Reserve’s missteps in waiting too long to tackle the greatest run-up in prices in four decades has shaken trust across markets and the American public that it is up to the task of curbing inflation.
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Financial market volatility and losses deepened on Tuesday, fueled by fears that the Fed continues to misjudge inflation and will come down too hard on the economy, prompting a recession. The S&P 500 has fallen into bear market territory — a 20 percent fall from the most recent high — and all the indexes have accelerated losses for the year.
Even more concerning are new signs that families have lost faith in the Fed’s policies. Consumer sentiment in June sank to a low not seen since the 1980 recession, according to a University of Michigan survey. Similarly, a poll by The Washington Post and George Mason University’s Schar School of Policy and Government found that most Americans expect inflation to worsen and are adjusting their spending habits, a mind-set that can make the surge in prices even worse.
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The change in consumer sentiment is particularly problematic, because if households don’t trust that price increases are temporary, they start changing their behavior and make inflation even tougher to manage. Indeed, a poll by The Washington Post and George Mason University’s Schar School of Policy and Government found that most Americans are beginning to account for inflation. About 6 in 10 (59 percent) people say they are driving less, minimizing their use of electricity and saving less, while about half (52 percent) say they are trying to buy products before prices rise, the poll finds.'
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Markets and households lose faith that Fed can handle inflation, June 14, 2022
Context (Banking Reform - English/Dutch) '..a truly stable financial and monetary system for the twenty-first century..'(Banking Reform) - 'Disaster is a strong but appropriate word that applies perfectly to the state of U.S. monetary policy..' - Dr. Hunt(Global Stagflation)(Inflation out of control) - Inflationary Psychology Has Set In. Dislodging It Won’t Be Easy.'..Almost universally, rates have been kept lower than the Taylor Rule had suggested..'