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Perceived inflation accelerates with housing prices perceived to have risen 15% over the past year

Cryptocurrencies take over yuan as the top threat to the dollar especially among young adults and Democrats

Since rising inflation has been one of the biggest stories of 2021, here at Zogby we are ringing in the new year by looking at Americans' perception of inflation for the fifth time. Previously (in 2016, 2018, 2020 and in May of 2021) we have found Americans' perception of inflation to be considerably higher than the official numbers. And our newest national online survey of 1,515 American adults shows that subjective perception of how much prices have increased over the past year has continued to outpace statistics.

Similar to our May survey, median overall perceived inflation over the past year is 10% - a double of what it was in 2018. Generation Z emerges as the outlier in their perception of inflation.

The average overall perceived inflation among females is 13.5% - almost two percentage points higher than in May of this year and higher than among males (12.1%). Baby Boomers (14%) and Generation X (13.3%) continue to perceive inflation as higher than does Generation Z (9.5%), but unlike in May when Millennials were much closer to Generation Z than Generation X in perceiving inflation, they now see inflation as almost as high as do older generations - 12.7% (more than three percentage points higher than in May). Democrats used to perceive inflation to be higher than Republicans as observed in our 2018 and 2020 surveys. In May that gap disappeared, only to reach a complete reversal in the latest survey where Republicans perceive average inflation to be 14.5%, compared to 12% among Democrats.

Among categories tested, median perceived inflation was highest for housing (15%) and 10% in all other categories.

In addition to overall inflation, we have continued to ask our respondents to separately estimate the change in prices for the following categories: food and beverages, housing, healthcare, college education and childcare. The highest mean perceived inflation was for housing (13.4%) and lowest for college education (9.4%). Mean perceived inflation for all categories has grown over the past six months.

Different categories are perceived differently by various demographic groups. Inflation in food and beverages (overall mean perceived inflation 11.9%) is perceived as highest by Baby Boomers (13.9%) and Republicans (13.6%). Similar to patterns observed six months ago, perceived inflation in housing prices (overall mean perceived inflation 13.4%), is highest in the West (this time at 15.5%, almost three percentage points higher than in the other three regions) and in the suburbs (14.7%). In the case of healthcare (overall mean inflation 10.5%) inflation is once again seen as highest by Baby Boomers (12.8%) and Republicans (11.9%). Perceived inflation in education and childcare (overall mean inflation 9.4% and 9.8%, respectively) is also highest among Baby Boomers (11.3% and 11.4%, respectively).

Americans' fear of inflation has also continued to rise. On a scale 1-10 where 1 stands for 'not at all afraid' and 10 for 'terrified', average fear of inflation this year is now 6.5 compared to 6.2 observed this May and last year's 5.9. Republicans and rural residents are most worried about inflation.

As inflation accelerates, Americans are getting more worried about it. This time, their average worry was 6.5 on a 1-10 scale (1 stands for 'not at all afraid' and 10 for 'terrified'), compared to 6.2 this May. Fear of inflation is fairly equally spread with some notable differences: Republicans (7.1) are more worried than Democrats (6.1) and Independents (6.3) while rural residents (6.9) are more worried than suburbanites (6.4) and small city residents (6.1). Generation Z (5.8) continues to be much less concerned about inflation than other generations, especially Generation X (6.8).

Cryptocurrencies (21%) have for the first time overtaken the Chinese yuan (16%) in being perceived as the biggest long-term threats to the US dollar. While holding on to the third place, the Euro has continued to fall (now at 8% compared to 12% in May) while precious metals have debuted at 4%. Older adults, males, top earners, Republicans and college-educated Americans perceive the Chinese yuan as the biggest threat, while young respondents, Democrats and those living in big cities see cryptocurrencies as the top threat.

In all our previous surveys, the Chinese yuan was perceived as the top threat to the US dollar. This is no more the case: for the first time, cryptocurrencies have claimed the top spot (21%) while the Chinese yuan ranked second at 16%, a drop of three percentage points from six months ago. Similar to results from previous surveys, the older the respondents are, the more likely they are to see the Chinese yuan as a threat to the US dollar: 31% of respondents over 70 years of age consider yuan the top threat, compared to 24% of respondents in the 55-69 age group, 13% of respondents in the 35-54 age group, 9% of respondents in the 25-34 age group and just 7% in the 18-24 age group. Conversely, the younger the respondents, the more likely they are to see crypto-currencies as a top threat: 26% of respondents in the 18-24 and 25-34 age groups see crypto-currencies as the biggest long-term threat to the US dollar compared to 14% of 70+ respondents. Other demographic groups that tend to see the yuan as a top threat are males (23%, only 10% among females), college educated respondents (24%, 13% among non-college educated), Republicans (22% vs. 13% among Democrats), and those in the top ($150K+) income group (24%). On the other hand, respondents living in large cities (27%), Democrats (25% vs. 19% among Republicans) and those in the $35-50K income group (30%) perceive cryptocurrencies as a top threat.

The poll of 1,515 US adults was conducted online between 12/21/2021 through 12/22/2021 and has a margin of error of +/- 2.5 percentage points.

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