Economists Expect Inflation to Remain 'Higher for Longer' Amid War Pressures
A survey of economists shows persistent inflation concerns and low expectations for Fed rate cuts, with 34% recession probability over the next year. Nearly half of surveyed economists don't expect inflation to hit the Fed's 2% target until 2028.
Elevated Recession Risk
Bankrate's quarterly survey of economists pegged the odds of a recession in the next year at 34%. The latest consumer price index showed an annual rate of 3.3%, following the biggest monthly inflation spike in four years.
Inflation Target Pushed Back
Just 6% of the surveyed economists expected the U.S. to see the Fed's target rate for inflation, 2%, by the end of the year, while nearly half don't expect the 2% inflation target to be hit until at least 2028. "Higher for longer is probably one of the more confident forecasts we can make about interest rates and inflation, and they're both joined at the hip".
K-Shaped Economic Pain
Economists discussed the so-called K-shaped economy, where lower-income people are disproportionately hurt by inflation while high-income households fare better, and other recent reports have pointed to a middle-class, not just lower-income households, that's increasingly finding it harder to keep pace. The housing market remains in a prolonged sales slump, saddled with affordability challenges and low inventory, with the National Association of Realtors reporting a lackluster beginning to the spring homebuying season while lowering its 2026 sales forecast.