The Federal Reserve cut its key interest rate by half a point, indicating confidence in managing inflation. Many Americans still face economic challenges despite this action. Inflation, which spiked to a four-decade high two years ago, has been declining and is approaching the Fed's target of 2%. Despite lower inflation rates, consumers report that the prices of essential goods remain high. Recent surveys reveal political divisions regarding economic views, influenced by criticisms from former President Donald Trump about the current administration's policies. Fed Chair Jerome Powell projected inflation to decrease to 2.2% for August, while acknowledging that high prices still impact consumers. Consumer sentiment shows some improvement, as grocery prices have risen modestly and gas prices have decreased. Median household income is growing faster than inflation, easing financial pressures for some families. Overall, signs indicate potential stabilization in consumer perceptions of the economy, with Fed officials suggesting inflation may drop below the central bank's target.
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