Consumer confidence hits highest level since December 2021 

According to one survey, U.S. consumers are more optimistic about the state of the economy than they have been in more than two years. new research According to the conference board released on Tuesday.

The nonprofit business research group’s Consumer Confidence Index rose for the third consecutive month to 114.8 in January from 108 in December.

Dana Peterson, chief economist at the Conference Board, said, “January’s rise in consumer confidence was due to slowing inflation, expectations for lower interest rates going forward, and generally strong employment conditions as companies continue to stock up on labor.” “It’s likely a reflection of the environment.”

The rise in consumer confidence is likely to be a welcome sign for President Biden’s re-election campaign, where the economy is set to take center stage after several turbulent years.

The latest confidence reading was the highest level since December 2021, when inflation hit 7% as the economy struggled to recover from the pandemic.

The Fed began the first of a series of interest rate hikes a few months later, in March 2022. The central bank raised interest rates from near zero to a range of 5.25-5.5% in July 2023.

Last month’s Consumer Price Index showed that rising interest rates had brought inflation down to 3.4% from a peak of 9% in June 2022 without triggering a recession, raising hopes for a rare “soft landing.” It’s increasing.

But high borrowing costs are weighing on consumers and eating away at their pandemic-era savings, a pessimism reflected in the Conference Board’s intervention study.

Positive signs that inflation continues to ease, with strong labor market, wage and gross domestic product (GDP) growth, and overall consumer sentiment reported. The central bank has indicated it may cut interest rates this year amid continued economic data. I’m more optimistic.

“While this increase was seen across all age groups, it was largest among consumers 55 and older. Similarly, confidence improved for all income groups except those at the top, with incomes of 125,000 and above. Only households with a dollar or more showed a slight decline,” Peterson said.

He further added, “Evaluation of the current situation rose in January due to an increase in positive views on the economy and employment situation,” and the percentage of people who answered that their current family situation was “good” increased. He pointed out that the percentage of people who answered “good” had decreased. “Poor” and “Suggests that consumers are starting the year in good spirits regarding their current household finances.”

The latest Gallup Economic Confidence Index, also released Tuesday, showed Americans are more confident in the U.S. economy than they have been in the past two years.

But the Gallup poll and Conference Board responses also show that concerns about soaring prices remain.

“Despite a slight improvement in Americans’ views of the nation’s economic situation, the proportion of Americans who view recent price increases as a personal hardship is still small,” Gallup analysts wrote in a new report. There has been no change.”