This January, consumer sentiment on the U.S. economy reached its highest level since 2021, according to the University of Michigan consumer sentiment index. This continues the upward trend that was reported in December 2023.
In a survey from the Federal Reserve Bank of New York’s Center for Microeconomic Data, perceptions of households’ financial situations have also improved. These recent positive opinions of the economy are in sharp contrast with opinions just months ago in November last year when public sentiment of the economy was poor despite low unemployment and falling inflation. The current perception of the economy is the best it has been in years.
Recession
These figures are in line with some predictions from last year that predicted a soft landing for the economy, where the economy would avoid a recession. “This is another sign that the economy is on track for a soft landing,” said Andrew Hunter, the deputy chief U.S. economist at Capital Economics, in a note after the consumer sentiment survey was published.
The unemployment rate is now at 3.7%, comparable with pre-pandemic unemployment levels. Price growth is still slowing, and median 12-month inflation expectations are the lowest they’ve been since January 2021. Overall, the economy is doing well and is improving.
Election
With the 2024 presidential race currently underway, the elections have been on many people’s minds. Since 1951, the incumbent president, or the current president, has always won the presidential race, with the exception of cases when there was a recession just before or during the election.
However, with current events, this trend is not a sure indicator of this year’s results, according to many, including Mark Zandi, an economist for Moody’s Analytics.
“The economy should be something of a tailwind for the president, but it may not be enough of a tailwind, given everything else that’s going on, to reelect him,” Zandi said in an interview with Politico.
