Fed Says Inflation Making 'Real Progress,' But Consumers Still Not Buying It

Last week, the Federal Reserve cut its key interest rate by a larger-than-usual 50 basis points, underscoring its belief that it has almost beaten inflation after three long years, but the public at large may not see it that way.

Consumer surveys, including one released on Friday by the Associated Press-NORC Center for Public Affairs Research, show that most Americans remain dissatisfied with the economy, which is still reeling from the shock of inflation reaching a four-decade high two years ago as the economy rebounded from the epidemic recession.

However, in the view of some economists, the shift toward ever-lower borrowing rates may finally boost consumer confidence. Inflation has been falling for more than two years and is almost back to the Federal Reserve's 2% target.

One positive factor is that average incomes are now growing faster than prices, making necessities affordable for more households.

Inflation remains a heated topic on the campaign trail. Trump has tried to capitalize on public discontent by blaming the policies of the Biden-Harris administration for the spike in inflation. However, a poll on Friday found that voters are now essentially tied in their vote for Trump and Harris' ability to manage the economy. And in June, an Associated Press poll showed that 60 percent disapproved of Biden's economic record.

That suggests that, at least from a political perspective, Americans' economic views have begun to improve.