Consumers say they are more optimistic that inflation will be lower in the future, continuing a trend of upbeat economic news for a politically and economically vulnerable White House.
The University of Michigan monthly consumer confidence index rose to 78.8 in January’s preliminary reading, released Friday. This is the highest level since July 2021, when the economy was still recovering strongly from the start of the COVID-19 pandemic.
“Consumer views were supported by confidence that inflation has turned a corner and strengthening income expectations,” Joanne Hsu, director of consumer surveys, said in a statement. “Over the past two months, confidence has climbed a total of 29%, the largest two-month increase since 1991, as a recession ended.”
The White House, which suffered politically from a gap in what people say about the economy and optimistic economic datatook a victory lap.
“President (Joe) Biden is making progress in reducing inflation while maintaining a strong labor market: wages have grown faster than inflation for 10 straight months, 14.3 million jobs have been created and inflation has fallen by about two-thirds,” Jared Bernstein, chairman of the White House Council of Economic Advisers, said in a statement.
“We still have work to do, but we are on the right track in implementing President Biden’s agenda, and people are starting to feel it. »
The Michigan Sentiment Index is one of the oldest and most publicized tracking tools for how consumers are feeling. Another, the Conference Board economic think tank’s Consumer Confidence Index, posted a gain in Decemberthe latest data available.
Both indexes ask people about their assessments of the current economy and their expectations for the future economy. For the Michigan Confidence Index, the current conditions reading rose 13.6% in January while the expectations measure was up 12.6%. Final data for the month is expected to be released on February 2.
The report also contains good news regarding inflation expectations, which have fallen slightly both for next year and the following five years.
“The current figure (for the coming year) is the lowest since December 2020 and is now within the range of 2.3 to 3.0 percent seen in the two years before the pandemic,” Hsu said.
Friday’s report follows a recent wave of strong economic indicators for the White House. The Labor Department said Thursday that new weekly claims for unemployment benefits during the second week of January fell to their lowest level since mid-September 2022. The producer price index, which tracks prices at the wholesale level, recorded a decline of 0.1% in December.
But the cconsumer price indexwhich tracks the prices consumers pay at checkout, job a stronger-than-expected 0.3% gain in December, reflecting the difficulty in ridding the economy of the latest level of inflation above the Federal Reserve’s target range.
And prices remain a political issue for the Biden White House. An Economist/YouGov survey In mid-January, a survey of 1,660 adults found that 85% think inflation is a serious or somewhat serious problem right now. The same investigation revealed that Biden’s approval rating on economy remains underwaterat 40%.
Republicans continue to criticize prices as their primary means of criticizing the economy. When the Consumer Price Index report was released on January 11, House Speaker Mike Johnson (R-La.) said on social media that it was “a disappointment” and that “Bidenomics continues to cost all American families dearly.”