Page 9 - Demo

NBIZ %u25a0 DECEMBER 2024 9Despite consumer price inflation falling considerably since peaking in 2022, household inflation-related stress and concern remain elevated, having dropped only slightly.Although most economists and policymakers tend to focus on the decline in inflation (the change in prices), a large share of households%u2014especially low-income households%u2014remain focused on still-elevated prices and the resulting difficulties paying expenses. More than four in ten households (45 percent) reported feeling highly stressed by rising prices in third quarter 2024, little changed from 47 percent in third quarter 2022. The incidence of high concern about anticipated inflation in the upcoming six months remained elevated at 57 percent of households in third quarter 2024 compared with 61 percent in third quarter 2022.As wage growth picked up and exceeded the inflation rate in the wake of the pandemic, earnings among low-income households have risen more rapidly than for high-income counterparts. Still, it%u2019s likely low-income households have been most pained by the pandemic-era inflationary spurt (Chart 1). As noted in a previous article, the inflation experience of low-income and renter households is likely very different than that of high-income households for a variety of reasons. Among them, inflation is felt more acutely because of the goods that low-income households and renters purchase. Additionally, they have not benefited from the surge in house prices since the pandemic.Household Pulse Survey Data Track TrendsWe use data from the Census Bureau%u2019s online Household Pulse Survey, which began in spring 2020. The survey tracks households regarding COVID%u201319 concerns, child care issues, difficulty paying expenses, food insufficiency, the likelihood of eviction and, since fall 2022, current inflation stress and concern about future inflation. The most recent data here covers from mid-August to mid-September 2024. We analyze quarterly trends in the %u201cinflation stress%u201d and %u201cinflation concern%u201d data. We look at the distribution of inflation stress by income group, since income is the most important determinant of stress. We also compare income stress and concern in Texas relative to the nation.Inflation Concern, Stress Questions PosedThe Household Pulse Survey asked respondents, %u201cIn the area where you live and shop, how concerned are you, if at all, that prices will increase in the next six months?%u201d Respondents chose from %u201cvery concerned,%u201d %u201csomewhat concerned,%u201d %u201ca little concerned%u201d or %u201cnot at all concerned.%u201dThe inflation stress survey question%u2014%u201cHow stressful, if at all, has the increase in prices in the last two months been for you?%u201d%u2014was only asked of respondents who said that prices for goods and services had increased in the past two months. Possible answers were %u201cvery stressed,%u201d %u201csomewhat stressed,%u201d %u201ca little stressed,%u201d or %u201cnot at all stressed.%u201d We focus on respondents who said that they were %u201cvery stressed%u201d and/or %u201cvery concerned%u201d about rising prices. For convenience, we refer to these groups as %u201chigh-inflation stress%u201d and %u201chigh-inflation concern%u201d respondents.Households Remain Worried About InflationThe share of households reporting rising prices declined from 93 percent in third quarter 2022 to 81 percent in third quarter 2024 (Chart 2). However, inflation stress and concern remain elevated, as indicated by the red and light blue bars in Chart 3. Most households remain worried about rising prices, despite the inflation rate decline.