Tag: feel

Americans are starting to feel better about the economy and inflation

Much has been made about how Americans feel bad about the state of the economy, even though according to many broad-based statistical measures things are pretty good.

It looks like that message has sunk in to some extent, as a widely followed reading of consumer opinion jumped in December and ended a four-month streak of declines.

The University of Michigan said Friday that its consumer sentiment index jumped 13% to 69.4, as people became less worried about inflation and more optimistic about a number of issues. That not only ended the downturn but reversed the decline, returning the sentiment index to where it was in August.

Quincy Krosby, chief global strategist for LPL Financial, wrote that the reading shows “a more optimistic view of economic conditions, which suggests that coupled with a stronger than expected payroll report, helps underpin the narrative of a still resilient economy.”

The report was a surprise to experts as well. Economists surveyed by Dow Jones Newswires and The Wall Street Journal thought sentiment would inch higher to 62.4 from November’s reading of 61.3, but the metric jumped instead.

“There was a broad consensus of improved sentiment across age, income, education, geography, and political identification,” said Surveys of Consumers Director Joanne Hsu. Year-ahead inflation expectations plunged from 4.5% last month to 3.1% this month. The current reading is the lowest since March 2021.”

Consumers generally haven’t felt great about the economy. They’ve been concerned about the possibility of a recession, which experts discussed a great deal in 2022 and 2023 even as the economy held up, and they’re feeling the continued effects of the inflation of the last few years along with other factors like rising credit card debt and the high cost of housing.

Inflation has been slowing for months and the job market

Consumers are starting to feel better about the U.S. economy

There’s still a long way to go — but U.S. consumers are starting to feel better about the economy.

The University of Michigan’s monthly Consumer Sentiment Index hit 72.6 for July — the highest reading since September 2021.

By comparison, the index, which polls individuals about overall business conditions and how they’re getting along financially, remains below the high of 101 it reached in February 2020, just prior to the start of the Covid-19 pandemic.

But the sentiment measure has now climbed eight of the past 11 months.

In an interview in advance of Friday’s release, index director Joanne Hsu said the tracker remains closely tied to inflation. With price increases slowing from their June 2022 highs, it makes sense that a rebound in sentiment is occurring, she said.

“Even though many consumers are still bracing for a possible downturn up ahead, they’ve noticed how inflation has cooled, and upgraded their views,” she said.

Consumers still consider current prices — and expenditures — very high, Hsu said. And the latest index reading found expectations for inflation one year from now changed little from last month.

But inflation isn’t the only consideration: The strong labor market is also helping bolster sentiment, Hsu said. At 3.6%, unemployment is at historic lows. The so-called Misery Index, which adds the unemployment rate to the inflation rate, is now approaching pre-pandemic levels.

While there is nearly uniform agreement among economists that the U.S. is not in a recession, certain segments of the American public don’t seem to believe it — especially Republicans.

Political affiliation is one the strongest determinants of views of the economy, Hsu said — with the Michigan index now at 96.7 among Democrats compared with 49.3 among Republicans (among Independents, it’s 71.5).

Historically, individuals who identify with the party out of power