Consumers just modestly confident in Fed's economic management, finds survey

A survey of more than 5,000 consumers found only modest confidence in the Federal Reserve’s ability to manage inflation and unemployment effectively.

The average level of trust in the Fed’s ability was measured at 3.2 on a scale of 1 to 7 (with 7 equaling the highest trust), according to a new paper published by the National Bureau of Economic Research.

“Trust in the Fed’s concern for the economic well-being of all Americans is slightly higher, averaging 3.5,” economists Pei Kuang, Michael Weber, and Shihan Xie said in the paper.

The authors also found a political divide among respondents. 

Democrats have an average trust score of 3.4 for the Fed’s economic management and 3.8 for its concern for Americans’ economic well-being, while “Republicans report lower levels of trust, with average scores of 3.0 and 3.1 for these metrics, respectively,” they wrote.

The survey was also used to study election scenarios. In the hypothetical case where Republican candidate Donald Trump is elected, 84% of consumers would view the Fed as aligned with the Republican Party.

The economists also found “significant heterogeneity” in perceptions of the Fed’s political leanings: “Most Democrat-leaning participants (66%) believe the Fed favors Republicans, whereas most Republican-leaning participants (60%) see it as favoring Democrats,” the paper said.