Why Are People So Down About the Economy? Theories Abound.
Why Are People So Down About the Economy? Theories Abound.
Exploring the Disconnect Between U.S. Economic Indicators and Public Sentiment
Booming Job Market and Consumer Spending
Despite a strong job market and active consumer spending, public sentiment about the U.S. economy remains largely negative.
Consumer Confidence Index Fluctuations
The University of Michigan's consumer confidence index showed improvement earlier in the year but has recently declined, indicating persistent public pessimism.
Impact on 2024 Presidential Election
Negative perceptions of the economy among voters in key battleground states could significantly influence the outcome of the 2024 presidential election.
Expert Opinions
Government officials and analysts are puzzled by the disconnect between economic indicators and public sentiment, attributing it to various factors including media influence and the lingering effects of the pandemic.
In what ways did the sentiment measure produced by the Conference Board differ from the University of Michigan's consumer confidence index in May?
In May, the sentiment measures from the Conference Board and the University of Michigan displayed differing trends in consumer confidence45. The Conference Board's measure showed an improvement in May, indicating a somewhat more positive view of current conditions. However, despite this improvement, the survey highlighted that expectations for the future remained uncertain and shaky.
In contrast, the University of Michigan's consumer confidence index, which had initially shown signs of optimism earlier in the year due to a slowdown in inflation in 2023, experienced a downturn again. This suggests that the optimism observed earlier was not sustained, leading to a souring of consumer sentiment as reflected in their index.
These differences highlight the variability in consumer confidence assessments, possibly influenced by different survey methodologies or timing, and the distinct aspects of economic sentiment each measure captures1.
How has the University of Michigan consumer confidence index changed over the course of 2023, and what factors influenced these changes?
The University of Michigan consumer confidence index experienced ups and downs throughout 2023. The index showed some improvement earlier in the year as inflation slowed down. However, it soured again as the year progressed, reflecting growing negativity among consumers. Factors that influenced these changes include inflation trends, economic concerns, and possibly the political environment.
In February 2024, consumer sentiment was virtually unchanged, slipping just two index points and solidifying the large gains from December and January, according to the University of Michigan Surveys of Consumers3. Consumers continued to express more confidence about the economy than they did in the fall of 2023. Year-ahead expectations for business conditions reached its highest reading since July 2021. Sentiment was around 25% above November 2023 and about 9% below its historical average since monthly data collection began in 1978.
In May 2024, consumer sentiment fell back about 10% following three consecutive months of very little change2. This 8.1 index-point decrease was statistically significant and brought sentiment to its lowest reading in about five months. The year-ahead outlook for business conditions saw a particularly notable decline, while views about personal finances were little changed2.
Overall, the University of Michigan consumer confidence index showed some signs of optimism earlier in 2023, but as the year went on, consumer sentiment became more negative, influenced by factors such as inflation, economic concerns, and potentially the political climate.