Americans are showing renewed confidence in the economy following the election, according to the New York Federal Reserve’s latest Survey of Consumer Expectations.
- Optimism about financial prospects has surged, with households anticipating better financial situations in the year ahead at levels not seen since February 2020.
- The survey reveals that fewer households expect their financial situations to worsen—a trend at its lowest point since May 2021.
Trump Voters: This rising optimism seems tied to expectations that a Trump administration will drive favorable economic outcomes. Perceptions of current financial circumstances remain largely unchanged as Biden finishes up his last full month in the office.
- Americans without a college degree, a demographic Trump won by 33 points, reported higher expectations for earnings growth and lower inflation concerns.
- Meanwhile, inflation expectations among the general population have risen, with one-year-ahead inflation projected at 3.0% and five-year-ahead expectations at 2.9%.
NOTE: Home price growth, which remains unchanged at 3.0%, suggests tempered confidence in certain sectors.
Impact On Rates: While Americans are looking to the future with renewed hope the downside is consumer optimism could spur higher spending, potentially driving up inflation and leading to interest rate hikes.
