Economists have raised their estimates for U.S. inflation and reduced expectations for interest rate cuts, according to a new survey.
They now see the personal consumption expenditures price index clocking in at 3.6% in the second quarter, Bloomberg's April survey of economists noted. The figure is a 0.3 point increase compared to the March survey.
The economists also think the Federal Reserve will cut interest rates once this year. The updated expectations are a result of the impact of the Iran war.
The war, which is now close to hitting the two-month mark, has led to a spike in oil and fuel prices, stoking inflation.
In fact, the index picked up sharply in March, driven largely by a surge in energy costs. The Consumer Price Index rose 0.9% in March, according to the US Bureau of Labor Statistics, after increasing 0.3% in February. Prices are now 3.3% higher over the past 12 months, showing that inflation remains above the Fed's historical benchmark rate despite cooling from earlier peaks.
The main driver of the increase was energy, which rose 10.9% in March. Gasoline prices alone surged 21.2%, accounting for most of the monthly rise in the overall index. Fuel oil also jumped sharply, while electricity recorded a smaller increase. On a yearly basis, energy prices are up 12.5%, with gasoline still nearly 19% higher than a year ago.
Core inflation, which strips out more volatile components like food and energy, rose 0.2% in March, matching February's pace. Over the past year, core prices increased 2.6%, suggesting underlying inflation pressures remain steady but not accelerating further.
In this context, new polling shows Americans are growing increasingly skeptical of President Donald Trump's handling of the economy, which has dragged down his overall approval rating to the lowest levels of both of his terms as president.
CNBC's latest All-America Economic Survey showed that 40% of respondents approve of Trump's overall job performance, while 58% disapprove. On the economy, 39% approve, and 53% disapprove, putting him underwater on what has long been one of his strongest political issues.
The survey, based on 1,000 interviews conducted April 15 through April 19, has a margin of error of plus or minus 3.1 percentage points. The topline represents a sharp decline from earlier readings and comes at a moment when inflation, energy costs, and anxiety over the broader direction of the economy have become central worries for voters.
The drop is especially relevant because it extends into Trump's own party. CNBC reported that Republican net approval fell 17 points, the lowest level for him in that group since 2017. Approval among Republicans dropped to 82%, while his support among non-MAGA Republicans fell 19 points to 60%. By contrast, self-identified MAGA voters remained overwhelmingly loyal, giving him 96% approval.
