A new Business Insider-SurveyMonkey Audience poll has found that Americans know shockingly little about the budget, federal deficits and other major economic indicators.
Last week, we asked nearly 500 respondents to estimate several economic statistics, including the inflation rate.
Remember, in the real world, inflation is low — 1.5% so far in 2013. That’s below the Federal Reserve’s target of 2%, and far below historical averages.
Some Americans know that. In fact, 31% of respondents on our survey got the inflation rate within a point of the correct answer.
But more often, respondents drastically overestimated inflation. 39% said the inflation rate was at least 5%.
22% thought inflation was in double digits.
On average, respondents said inflation is 32%. That number is skewed by a handful of respondents who gave answers in the three and four figures, contending that we are already experiencing Weimar-style hyperinflation. Perhaps they have been listening to Glenn Beck.
But even when you throw out those outlier responses, dropping the top and bottom 5% of answers from the survey, you’re still left with an average response of 9%, six times the actual rate of inflation.
Public misperceptions of inflation aren’t new, but they appear to be getting worse. The Cleveland Fed surveyed 20,000 people between 1998 and 2001 and learned that on average Americans thought inflation was 6%. Over that period, the actual average inflation rate was 2.7%.
So we’ve gone from being off by a factor of two to a factor of six. Not good.
Also, 5% of Americans think that the dollar is in deflation. So there’s that.
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