A new CNN poll shows the focus of American voters is still clearly on inflation, and their view of the nation’s economy sank to its lowest point in a decade. And even as the Federal Reserve implemented the largest interest rate hike since 2000 to fight inflation, 80% of the country says the government is not doing enough.
The CNN poll, conducted by SSRS, shows only 23% of the country rates the economy as even somewhat good, less than half who agreed with that description last April. Only 32%, the same total as last summer, says conditions in the U.S. are good.
Along party lines, 94% of Republicans describe the current economic conditions as poor, followed closely behind by 81% of independents. Of particular note for President Joe Biden is 54% of his fellow Democrats rate the economy as poor. And after two years of pouring cash into the economy to avert a pandemic-spawned recession, the central bank has now decided to act.
This follows the administration’s claims through nearly the end of last year that soaring inflation tearing money out of American wallets was “transitory.”
The Federal Reserve followed through on investor expectations and raised its benchmark interest rate 50 basis points, the largest hike since 2000. The move is in response to inflation that remains at a four-decade high of 8.5% and follows March’s quarter-point increase. Markets already had the rate hike built in but have remained volatile in recent weeks.
The central bank also announced its plan to begin shedding bonds purchased during the pandemic to keep funds flowing through the economy. This policy was in large part successful, but soaring inflation forced the Fed to rethink that policy. The $9 trillion balance sheet now held by the central bank will begin to shrink by $47.5 billion per month in June and increase to $95 billion in September.
A pivotal part of Fed Chair Jerome Powell’s announcement came when he said that increases of 75 basis points are not being “actively” considered. This declaration appears to have reassured investors as Wall Street surged from that point through Wednesday’s close.
There is a growing sense of desperation among Democrats, as seen by the Supreme Court leak this week, to find anything to change their trajectory heading into the midterm elections. But without a Titanic-sized reversal in the economy, all the manufactured crises in the world will not alter what is coming.