WalletHub is out with its new Fed Rate Hike Survey, gauging customer sentiment about the increases Americans are facing while dealing with inflation and other economic challenges, including a possible recession on the horizon.
“Americans have been worried about high prices for months, and the anxiety seems to be growing, as WalletHub’s latest Fed Rate Hike Survey found that 92% of people say they are concerned about inflation, marking an increase from 85% in September,” said Jill Gonzalez, WalletHub analyst. “The upcoming holiday shopping season, the increased cost of debt from recent Fed rate hikes, and high grocery bills are likely key drivers of increased consumer price sensitivity.”
The survey found that 71% of respondents say their wallets have been affected by the Fed interest rate increases so far, with another expected to come in early November. Not surprisingly, 33% are upset about the hikes, 29% unprepared and 23% indifferent, while 15% responded they were happy about the climbing interest rates.
“Consumers are fed up with the Fed,” said Gonzalez. “The number of people who currently feel unprepared for rate hikes is up 18% compared to September. Attitudes will not change until interest rates start to decline.”
Gonzalez says that WalletHub expects the Fed’s likely Nov. 2 rate hike to cost U.S. consumers $5.1 billion in 2022 alone.
“When the Federal Reserve raises its target interest rate, the rates on most credit cards rise too,” said Gonzalez. “Most credit cards have variable rates that are tied to the Fed’s target rate. Considering that Americans collectively owe more than $1.07 trillion to credit card companies, even small rate hikes are very expensive.”
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When asked which monthly expenses have been most affected by inflation, 55% said groceries, 40% gas and 5% housing. In fact, 67% feel that the government should put a cap on grocery prices.
The survey also drilled into people’s feelings about a potential recession, with 52% saying they are financially prepared for one while 48% are not. The vast majority of respondents (85%) feel that we are headed into a recession, a 7% increase from September.
“Americans know a recession is coming, but most of us are not prepared to deal with one,” said Gonzalez. “Unfortunately, less than half the country say they’re not financially prepared for a downturn.”