Early Pandemic Job Losses Pale Next to Inflation Fears

Off the Charts: The Visual Says It All

Surprised man looking at grocery receipt in mall

Elena Perova / Getty Images

Investors’ outlook on inflation has gotten so bad that it’s even more negative than their outlook was about unemployment at the start of the pandemic, when millions of Americans lost their jobs, according to a new poll.

Net optimism about inflation—that’s the percentage of investors who are optimistic minus the percentage who are pessimistic—fell so far into negative territory in the fourth quarter that it was well below the reading unemployment got in the second quarter of last year, the first to reflect the pandemic crush to the economy, the chart below shows. 

The fourth-quarter inflation reading, based on a Nov. 1-7 Gallup web study of 953 U.S. investors with at least $10,000 in stocks, bonds, or mutual funds, helped push the Gallup Investor Optimism Index to its lowest point since the second quarter of 2020, though the outlook for economic growth and unemployment also dimmed, falling into negative territory. Only optimism about the stock market showed a slight improvement.

The inflation-unemployment comparison is striking since the monthly unemployment rate soared to a record 14.8% in April 2020. Why people feel even more negative about inflation now may come down to how long they expect higher prices to stick around. Consumer prices rose 6.8% in the 12 months through November, the fastest pace since June 1982.

“Many Americans perceived the economic disruptions caused by the pandemic to be temporary,” said Lydia Saad, director of U.S. social research for Gallup, in an email. “Most at that time didn’t think the pandemic would last beyond the year and thus assumed things would get back to normal fairly quickly. By the time the world realized the pandemic was going to persist, the jobs rate was already improving. By contrast, we found in June that 72% of investors thought inflation would continue for a sustained period.”

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  1. Gallup. “US Investor Optimism Down as Economic Outlook Worsens.”

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