HILLSBOROUGH COUNTY — The Federal Reserve announced this week in its January meeting that the committee was going to keep interest rates steady at 5.25% to 5.5%.
“Their economic decisions tend to give us, I think, the best look into what some of the really big economists think is going to happen in the future,” said Thomas Stockwell, Ph.D., Assistant Professor of Economics at the University of Tampa.
In a statement, the Fed said the economic outlook is uncertain, and the committee remains highly attentive to inflation risks.
“So as long as that continues to be true they’re going to hold interest rates the same until this economic conditions change,” said Stockwell.
He continued, “The Fed has a goal for inflation and that inflation is 2%. The reason for that is a little bit of inflation is a good thing but when it gets incredibly high that’s when it’s bad for consumers like us. So if we can get inflation down to that 2% mark that they’re shooting for, that 2% yearly mark, inflation will at least be manageable for people in their everyday lives."
While inflation remains elevated, experts do continue to see things trending in the right direction.
“The most recent data that I’ve seen is really just kind of a continuation on what we saw at the end of 2023,” said Michael Snipes, Assistant Professor of Instructor in Economics at the University of South Florida.
That data showed at a national level steady improvement of economic conditions over the previous 3 years.
“Unemployment is looking good. Labor markets are looking good. And inflation is starting to come down,” said Snipes.
However, just because inflation is coming down in some areas, that doesn’t necessarily translate to lower consumer prices on everyday items.
“We all know that post-COVID, we had inflation rates that reached almost 10%. They were extremely high. Prices of goods and services have been going up by an incredible amount the past couple of years. So the only thing that’s happening now is prices are going up slower than they used to before. Inflation rate coming down does not mean prices are coming down. It just means prices aren’t going up as fast as they were before,” said Stockwell.
“So it’s entirely possible that prices could be coming down in some areas of the economy, but in other areas of the economy, prices could actually be holding steady or actually increasing. And that could still bring the average down. That’s kind of what we’re seeing,” said Snipes.
Food and housing continue to be the biggest drivers of inflation.
“So when you kind of look behind the numbers a little bit, it’s going to be a little bit of a struggle for most people because of what is driving inflation at this rate… so it’s a bit of mixed bag when we look into how this is going to affect the average consumer,” said Snipes.
Experts said this means we likely won’t see many major changes and that prices for consumers will probably remain steady for the time being.
“Kind of looking into the future of 2024, there are potentially a couple fairly big issues that could pop up, but I don’t necessarily see anything on the horizon that we really need to be concerned about. I don’t think that we’re heading into any recession or a depression or anything like that,” said Snipes.
“You can’t ever perfectly predict the future but just kind of based on the macroeconomic data that we’re seeing, there’s no real reason to not be optimistic about 2024 moving forward,” he added.
Overall, economists believe that slowly overtime, prices will start to trend normal but that could take a while.
“Wage growth is the thing that we really need in order to feel like we’re moving forward. When our incomes are getting better, we’re able to buy more stuff going forward, we’re able to save more money going forward. So until wage growth catches up to inflation, I think it’s hard for consumers to feel good about the economy and rightly so,” said Stockwell.
