Fed Faces Trust Gap in Economic Management, New Data Show

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The average level of trust in the Fed’s ability measured 3.2 on a scale of 1 to 7, with 7 representing the highest trust. (Andrew Harrer/Bloomberg News)

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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 measured 3.2 on a scale of 1 to 7, with 7 representing 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.

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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.

In the hypothetical case of Republican candidate Donald Trump winning the presidential election, 84% of consumers would view the Fed as aligned with the Republican Party, the survey found.

The economists also found significant differences 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.

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