Americans Concerned About Interest Rate Hikes, Mark Volatility, Survey Shows
BLOOMINGTON, Ill. — The Federal Reserve’s recent interest rate hike and a rocky start to the year in global financial markets is hurting consumer confidence, according to a new survey. It showed that, on average, American believe there is a 36% chance the U.S. economy will fall into a recession this year. The COUNTRY Financial ... Read More »
BLOOMINGTON, Ill. — The Federal Reserve’s recent interest rate hike and a rocky start to the year in global financial markets is hurting consumer confidence, according to a new survey. It showed that, on average, American believe there is a 36% chance the U.S. economy will fall into a recession this year.
The COUNTRY Financial Security Index, a survey of 1,000 American adults on personal financial security topics, revealed that many Americans are feeling uncertain about the state of the economy. They are unsure how the recent interest rate hike — as well as potential future increases — will influence both the economy and their personal finances.
This wariness comes on the heels of a slight dip in the most recent measure of overall financial security by COUNTRY Financial in December 2015. After reaching post-recession highs in June 2015, the Financial Security Index dipped from 66.9 to 66.6 following months of financial market volatility and interest rate uncertainty.
“While the Federal Reserve has taken its first steps in normalizing U.S. monetary policy, future rate hikes will be measured,” said Troy Frerichs, director of wealth management at COUNTRY Financial. “Right now we don’t view U.S. monetary policy as a major headwind for the U.S. economy in 2016. Despite the rocky start to the year in the financial markets, the U.S. economy continues to grow with strong support from the labor markets and low energy prices.”
Less than 20% of consumers surveyed believe raising interest rates in 2016 will help the U.S. economy, while even fewer (11%) believe it will benefit them personally. In contrast, many Americans have a negative outlook on interest rate increases, but an even larger group doesn’t know what to expect:
31% of Americans report that they “don’t know” what the Federal Reserve’s actions on interest rates will do to the economy
Nearly one in four (23 percent) don’t know how slowly raising interest rates will impact their personal financial situation
“While the Fed usually begins to raise short-term interest rates to keep the economy from overheating, the economy, in this instance, isn’t showing signs of excess and this is more of a normalization process of historically low rates,” said Frerichs. “Initially consumers won’t be deterred from buying homes or cars simply because of this initial rate hike. Financing costs are still very low.”
When the Federal Reserve increased interest rates at its December 2015 meeting, it was the first exposure to an interest rate increase for many millennials. According to COUNTRY Financial, 40% of millennials are unsure how rising rates will impact the economy and 32% do not know how rising rates will influence their own financial situation.
However, more than half of millennials believe that the likelihood of rising interest rates will matter when it comes to making major purchases, such as buying a car or home.
“The initial rate hike was more important for headlines than for the health of the economy, and the economy will need to continue to show improvement for the Fed to keep raising interest rates,” Frerichs noted. “A strong economy should buffer concerns about rising interest rates, especially given the current levels of interest rates.”
More Industry

Pennsylvania Dealership Under New Retailers
The sale of the Chrysler Dodge Jeep Ram store puts a family auto group on a leaner path as first-time dealers take the helm.
Read More →
Battery Storage Takes Priority Over EVs
U.S. automakers are prioritizing battery energy stationary storage over electric-vehicle production as the consumer demand for EVs lags the rest of the world.
Read More →
Auto Dealers Feel Better But Not Great
A second-quarter Cox Automotive poll of franchised retailers and independents found better views of the current market after a good spring but anticipation of third-quarter storminess.
Read More →
New-Vehicle Sales Picture Relative
A May forecast is complicated by last spring’s trade tariff effects on auto retail. Despite continued hard realities, many consumers took advantage of ways to bite the bullet.
Read More →
Auto Group Acquires Third Nissan Rooftop
Iowa-based Coleman Automotive Group recently acquired its seventh dealership, McGrath Nissan, which it renamed Nissan of Elgin.
Read More →
April Less Affordable
Based on prices, reduced incentives and slower household income growth, consumers found it more challenging to buy new last month, Cox Automotive reported.
Read More →
Building an Extraordinary F&I Agency
Work to determine your specialized talent, because that fact will determine everything about your agency’s future.
Read More →
Recipe for Compliance
The secret to both amazing barbecue and compliance is the same: understanding the basics and committing to a process.
Read More →
EVs Getting More Attractive
A growing percentage of U.S. consumers are open to switching and fewer are adverse to the idea, according to a recently completed survey. That’s despite the end of a tax break.
Read More →
EV Sales Drop in April Following Surge
North American electric-vehicle sales were down 28% year-over-year, a sharp contrast from global EV sales growth of 6%.
Read More →