The cost of power in the Sunshine State

SPEAKER_1 (0:00)

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Kimberly Adams (0:31)

A snapshot of consumers' expectations for the future of the economy, and it's a mixed bag.

From Marketplace in Washington, I'm Kimberly Adams. The New York Fed has released its latest survey of consumer expectations. And when it comes to inflation, how much folks think prices will have risen by a year from now? Expectations were up sharply in September to 3.9%.

But consumers were feeling a bit better about the job market last month. They think they're less likely to lose their job in the coming year, and if they do, that they're more likely to find another one. Marketplace's Mitchell Hartman has more.

Mitchell Hartman (1:09)

Last month, consumers saw one price keep going up at nearly every street corner they passed, says Bill Adams at Fifth Third Commercial Bank.

Bill Adams (1:18)

The increase in inflation expectations in September, it's gas prices and also diesel prices, which consumers don't usually pay but have been in the news a lot. With the higher price of gasoline, consumers are telling us they're more worried about making ends meet that has flowed through the lower expectations of household finances.

Mitchell Hartman (1:37)

Consumers now expect food prices to rise more than 5%, rent nearly 7%, medical care more than 9%.

Of course, they may not turn out to be right about any of that, but that's somewhat beside the point for the Federal Reserve when it decides whether to raise interest rates again, says economist Oren Klatschkin at Nationwide. Rising inflation expectations is definitely part of the reason why they chose to hike rates last month and why we think they are going to continue to raise interest rates. He says if the Fed lets those expectations continue unchecked, that could certainly have an impact on spending habits. When consumers expect higher prices and rush to make purchases to get ahead of them, that can drive even more inflation, making the Fed's job of fighting it harder. I'm Mitchell Hartman for Marketplace.

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Kimberly Adams (3:21)

It's time for us to take the Marketplace Economic Pulse, where we check in with reporters from public media outlets across the country about the economic stories they're following in their communities. This week, we're joined by Jessica Meszaros, a climate and environment reporter at Florida's WUSF. The team there has been working on their own series called The Cost of Power, exploring why energy bills are so high in the Sunshine State. Jessica, good morning.

Jessica Meszaros (3:48)

Good morning. Thank you for having me.

Kimberly Adams (3:50)

Jessica, you found in your reporting that energy bills in Florida have jumped by as much as 70% over the past 10 years. What explains that?

Jessica Meszaros (3:59)

Yeah, bills are so high, mostly because of consecutive rate hikes. You know, it's every three years or so, companies are allowed to ask for a rate hike, and sometimes they would, sometimes they wouldn't in the past, but it's been consecutive. Every time we know that they will.

There's also something called pass-through costs and other surcharges, which have pushed up prices faster than household incomes. And then Florida in particular, Florida utilities, they're allowed to make the most return on equity than anywhere else, according to my sources. Like Florida Power and Light, it's the highest in the country of any major utility.

Kimberly Adams (4:33)

Well, say more about the role of utility companies in all of this. That feels like quite the outlier.

Jessica Meszaros (4:39)

Well, Florida has four major investor-owned utilities, and at the same time that these bills have been climbing, these investor-owned utilities made more than $6 billion in profits last year. Consumer advocates are pretty upset about that, and they think that profits should be capped, and that that's contributing as well to these bills rising.