A new survey from the University of Michigan shows a stark divide in consumer sentiment about the economy, with differing opinions on inflation and President-elect Donald Trump’s impact on pocketbooks.
The overall consumer sentiment index rose 3.1% in December to 74, while the index measuring current conditions jumped 21.6% to 77.7. However, the future conditions index fell 6.9% to 71.6. Analysts attribute the surge in current conditions to consumers betting on inflation rates.
Democrats expect higher inflation due to Trump’s tariffs and policies, while Republicans believe a slowdown is coming under his leadership. Meanwhile, economists predict continued growth into 2025 and eventual reduction of inflation to 2%.
The divide between Democrats and Republicans also affects their attitudes toward large purchases, with those who voted for Trump more likely to think now is a better time to buy durable items expecting future price increases. Interestingly, year-ahead inflation expectations rose from 2.6% to 2.9%, while long-run expectations decreased slightly.
Source: https://www.usnews.com/news/economy/articles/2024-12-06/republican-consumers-absolutely-giddy-about-an-economy-and-inflation-that-they-derided-just-a-few-months-ago-democrats-see-it-differently