Americans Are Suddenly a Lot More Upbeat About the Economy - WSJ
Americans are rapidly becoming much more upbeat about the economy. Consumer sentiment surged 29% since November, the biggest two-month increase since 1991, the University of Michigan said Friday, adding to gauges showing improving moods.
It’s a sharp turn after persistently high inflation, the lingering shock from the pandemic’s destruction and fears that a recession was around the corner had put a damper on feelings about the economy in recent years, despite solid growth and consistent hiring. Now Americans are bucking up as inflation cools and the Federal Reserve signals that interest-rate increases are likely behind us. And with the solid labor market putting money in the bank accounts of freely spending consumers, recession fears for 2024 are fading.
Consumer sentiment leapt 13% in the first half of January from December, the Michigan survey said, after a sharp rise the prior month. The pickup in sentiment was broad-based, spanning consumers of different age, income, education and geography.
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The state of the economy is the biggest political Rorschach test going into 2024. Republicans have hammered President Biden on inflation and made economic issues central in their pitches to voters. Meanwhile, the Biden administration contends that its policies have led to a robust labor market, cooling inflation, stronger domestic supply chains and lower prescription-drug costs.
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Steady improvement in Americans’ views of their economic prospects could bolster Biden’s re-election chances, if it means his message is breaking through, said Jesse Ferguson, a Democratic strategist. “That doesn’t mean everything is great and everything is fixed,” he said. “But people see a path where the next day can be better than the last one, and that translates to some level of economic security.”
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