NORFOLK, Va. — "Stagnant," "delicate," and "great" are all words some Hampton Roads residents of all ages use to describe the state of the American economy.
"I'm not going to propagate a negative energy or vibe," explained Tidewater Community College (TCC) mechanical engineering student Andrew Cawley who called the economy stagnant, "However, I'm not going to be blindsided or not acknowledge that there are things that Americans of my age may not have — as much as someone more affluent or in a better standing."
Economic experts have been highlighting good economic indicators for months, such as low unemployment sitting at 3.8%; however, there are clear signs of struggle.
"The overall health of the economy is still growing positively," said TCC Professor Emeritus of Business Administration Peter Shaw. But that's while average prices have risen 19% coming out of the COVID-19 pandemic.
At the top of the list is auto insurance, up 22% over the last year according to the Bureau of Labor Statistics.
That's followed by rent, up 5.7% and housing up 4.7%. The price of hotel rooms, airfare and rental cars have dropped, 1.9%, 7.1% and 8.8% respectively.
"We literally just refinanced a house. I was like — are you kidding me? This is not lower! How do people afford this? Everything is going up. We got a kid going to college soon," said Candice Heidelberg-Denison whose one-word description of the economy is "challenging."
Heidelberg-Denison, an education manager with the Virginia Stage Company says consumers have to think about things now in a much more frugal way. "I really think about things now — ok, how much have I spent? What else do we need to do?"
Meanwhile, Skip Miller, who's retired, believes the economy is doing great and price increases should just be expected as time moves on. "Compared to what we had going on the previous four years, I think everything is bouncing back in a positive direction. I think a lot of the supply chain issues have been addressed and solved."
Shaw says the popular prediction by economic analysts is that the economy, now growing at 1.6%, will begin to slow down in the second and third quarter of this year, perhaps down to only a half of a percent.
That will spike the unemployment rate.
"When you break that magic 4% unemployment rate, all of sudden consumers start pulling back on their spending and that should put a lot of pressure on bringing the inflation rate down going into the second half of the year."
That will also pressure the Federal Reserve to cut interest rates. "You might start seeing in the second half of the year, two maybe three cuts, quarter-point cuts by the feds primarily due to the performance of the economy," Shaw explained.
After a few rate cuts, expect inflation to drift downward and hit the target of 2% sometime next year.