Sign up to create alerts for Instruments,
Economic Events and content by followed authors
Free Sign Up Already have an account? Sign In
Quotes
All Instrument Types
- All Instrument Types
- Indices
- Equities
- ETFs
- Funds
- Commodities
- Currencies
- Crypto
- Bonds
- Certificates
Please try another search
Fed’s Interest Rate Hikes Stir Economic Anxiety Among Middle-Class Americans
Editor
Published Oct 30, 2023 04:22PM ET
Middle-class Americans are increasingly anxious about the economy, despite a strong job market and a blowout GDP report showing an unexpected Q3 growth surge of 4.9%, according to a Harris Poll for Bloomberg News. The Federal Reserve's aggressive interest rate campaign, aimed at curbing inflation that hit a 40-year high in 2022, is causing this unease. The poll reveals that 57% of middle-class Americans feel these higher interest rates are negatively impacting their household finances and 44% are stressed about the economy.
The Federal Reserve has adopted a "higher-for-longer" policy, maintaining interest rates at peak levels of 5.25%-5.5% in September, with indications of another increase this year. Investors using CME Group's (NASDAQ:CME) FedWatch tool anticipate steady rates at the November meeting but some predict a December rate hike. These higher interest rates have pushed up the federal funds rate and 30-year mortgage rates, affecting borrowing costs for home equity lines of credit, auto loans, and credit cards.
The survey by the Harris Poll also indicates escalating economic anxiety due to these higher borrowing costs exacerbating economic stress. As a result of the Fed's anti-inflationary measures, US consumers paid a record $130 billion in credit card interest and fees last year, as reported by the Consumer Financial Protection Bureau. If the 4.9% annual growth rate recorded in Q3 continues to fuel inflation, further rate hikes may ensue.
Middle-class individuals like Rebecca Acuna from Indianapolis, Tiffany Bond from Maine, and Tom Maley from Ohio have voiced concerns about managing finances and affordability issues amidst these conditions. This apprehension poses a challenge to President Joe Biden's "Bidenomics" agenda aimed at empowering the middle class. The situation is further complicated by record car payment defaults and generational differences in economic outlooks.
Karl Jacob, CEO of LoanSnap, warns that this era of higher interest rates will burden Americans and potentially impact the broader economy. Meanwhile, inflation, as measured by the Consumer Price Index reported by the Labor Department, remains above the Fed's 2% target.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
Related Articles
Add Chart to Comment
Confirm Block
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.
Report this comment
I feel that this comment is:
Comment flagged
Thank You!
Your report has been sent to our moderators for review
Add a Comment
We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
Enrich the conversation, don’t trash it.
Stay focused and on track. Only post material that’s relevant to the topic being discussed.
Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.