Americans are feeling better about the economy

Americans are feeling more optimistic about the economy, with a 29% surge in consumer sentiment since November—the largest two-month jump since 1991, according to the University of Michigan.

The university’s consumer sentiment report shows how Americans feel about their finances, economy and business conditions.

January also saw a drop in inflation expectations for the coming year, which dropped to 2.9% in January from 3.1% in December—the lowest since December 2020.

Key factors contributing to the upbeat mood include cooling inflation, a strong labor market, and lower gasoline prices. Despite the improvement, consumer sentiment remains 20% lower than pre-pandemic levels.

The positive trend is also influencing political narratives as Republicans focus on economic concerns while Democrats highlight a robust labor market and lower inflation.

Analysts suggest that continued improvement in economic prospects could impact voter sentiment. However, risks such as recession, global events, and persisting inflation remain.