Economic concerns persist despite cooling inflation, new report shows

DURHAM, N.C. (WTVD) -- According to the Personal Consumption Expenditures Price Index, inflation cooled slightly in January, though other metrics highlighted a continued level of economic strain.

"When people are more concerned about the future, there's a heightened level of uncertainty. They tend to put on hold some of the big purchases like cars," said Dr. John Coleman, a Professor at the Duke Fuqua School of Business.

The Index, a key indicator used by the Federal Reserve, showed that despite wages beating expectations in January, consumer spending dropped, while personal savings increased. The PCE showed inflation rose 2.5% year-over-year in January, down slightly from 2.6% in December.

"Inflation is still not quite as low as the Fed is targeting. They'd like to get down to the 2% rate, and inflation then is hovering around two and a half percent based on this particular price index," said Coleman.

Despite a strong finish to Friday's trading session, the DOW, Nasdaq, and S&P 500 all fell in February.

"The stock market hates uncertainty. (It) likes to kind of know what's going on, know what's on the horizon. And the Trump administration has been working very diligently on upsetting a lot of the status quo. That may be for the good, maybe for the bad, depending upon your persuasion. But the point is, it introduces a lot of uncertainty about what's going to happen over the next year or so. And the stock market doesn't like that. The other thing that it reacts to very, very sharply is the threat of trade wars. That would be very devastating for the world economy, including devastating for the U.S. and we have learned that in the past, and I guess we forgot that," said Coleman.

Separately, a social-media driven protest called on consumers to boycott major businesses, gas stations, fast food restaurants and the use of credit cards for 24 hours Friday, instead urging them to use cash at small businesses. While the aims of the protest appear varied, the feeling of broad frustration against corporations among those participating persist.

"The turnout today has been great. You know, it is a lot of regulars, but it's also several new people that have come in," said Kelli Cotter, the Partner and General Manager at Toast in Durham.

Cotter and her husband opened the sandwich shop seventeen years ago and have had to navigate changes to the city, as well as the shift toward more remote work.

"We had to pivot to doing a lot more takeout, a lot more catering," said Cotter.

Now, they're dealing with the long-term effect of rising costs.

"We get our profit loss a month or so behind it and I could not believe how badly we were doing. Unfortunately, because of inflation, because everything rose so, so slowly and so steadily, it just caught us off guard. So now we are having to raise our prices, and I feel very bad because I want to still be accessible to everybody," said Cotter.

Cotter encouraged people to visit local businesses, noting the challenges they continue to face.

"We operate with such a thin margin of success or failure. If we don't get that support and we all go away, then all that's going to be are big box chains," said Cotter.