- Google searches for “inflation” have plummeted close to pre-crisis levels, Bespoke Investment Group said Thursday.
- The slide suggests Americans buy President Biden’s argument that surging price growth is temporary.
- The easing concerns could help Biden’s outlook materialize, as inflation is guided by Americans’ expectations.
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Inflation still sits at decade highs, but Americans are less and less worried about it.
Just four months after inflation fears peaked, public interest in nationwide price growth sits near pre-crisis lows. Google searches for inflation and inflation-related terms plummeted through the summer and are now roughly one-third the levels seen in May, according to data collected by Bespoke Investment Group. Search activity is now the lowest it’s been since fall 2020 and below some peaks seen before the pandemic.
The months-long decline in inflation searches suggest a newfound confidence in the economic recovery.
For President Joe Biden and the Federal Reserve, the trends were expected. Both said earlier in the year that quick reopening would boost inflation, particularly in sectors where activity completely froze during lockdowns. Instead of cutting stimulus and putting the administration’s infrastructure plan on ice, Biden pushed for both. Inflation, the administration argued, would fade even with more government spending.
And inflation did pick up. Price growth rocketed to its fastest pace since the Great Recession. Republicans seized on the public’s concerns, linking inflation to Democrats’ $1.9 trillion stimulus plan. And all the while, Americans concerns over surging prices leaped higher.
That phenomenon has since abated, and the return to normal levels of concern reflects the public is confident in the Biden administration and the Fed’s outlooks.
Where Republicans amplified concerns of irresponsible spending and an inflation crisis, the White House sees recent price growth as a side effect of the otherwise healthy recovery. Americans are increasingly siding with the latter, according to search trends.
That suggests Democrats have public support as they work to finalize Biden’s next spending package. Moderate Senate Democrats have balked at its $3.5 trillion price tag, with Sen. Joe Manchin saying in a Wall Street Journal column that the party should “pause” to see if inflation “is transitory or not” before spending more. Americans seem to be telling Manchin they don’t need a pause.
Recent inflation reports have also fallen in line with Biden’s forecast. Price growth slowed sharply for a second straight month in August as categories that previously saw rapid inflation cooled off. While year-over-year inflation remains elevated, monthly price growth is on the decline.
The slowdown could be aided by Americans’ easing worries. Inflation is somewhat driven by people’s expectations, and fears of permanently soaring prices can speed up inflation. The data, then, signals Americans could be helping the government’s inflation dreams come true.
“If this more recent trend of declining search interest continues, it would further support the Fed’s forecast for recent inflation pressures to be ‘transitory’ in nature,” Bespoke said in a Thursday blog post.