<p><span>It is a pleasure to join the Economic Club of New York for this discussion.</span><a href="https://www.federalreserve.gov/newsevents/speech/brainard20210601a.htm#fn1" title="footnote 1"><span>1</span></a><a name="f1"></a><span> Consumer demand is strong, vaccine coverage is expanding, and pandemic-affected sectors are reopening in fits and starts. As was the pandemic shutdown with its ebbs and flows, the reopening is without precedent, and it is generating supply–demand mismatches at the sectoral level that are temporary in nature. Separating signal from noise in the high-frequency data may be challenging for a stretch. The supply–demand mismatches at the sectoral level are making it difficult to precisely assess inflationary developments and the amount of resource slack from month to month.</span></p>
University of Michigan
A falloff in consumer confidence in May is due to surging inflation that consumers anticipate will persist in the year ahead, according to the University of Michigan Surveys of Consumers.
Record proportions of consumers reported higher prices across a wide range of discretionary purchases, including homes, vehicles and household durables. The impact of higher prices on discretionary spending will be offset by the more than $2 trillion increase in savings in the past year as well as by improving job and wage prospects, says U-M economist Richard Curtin, director of the surveys.
While higher inflation will diminish real incomes, the data still indicate an exceptionally robust outlook for consumer spending through mid-2022, he says.