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Household finance outlook hits highest since February 2020 following Trump win

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4 months ago

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U.S. President-elect Donald Trump holds an award during the FOX Nation’s Patriot Awards at the Tilles Center on December 05, 2024 in Greenvale, New York.

Michael M. Santiago | Getty Images

Optimism about household finances hit a multiyear high following Donald Trump’s presidential election victory in November, according to a New York Federal Reserve survey released Monday.

Households expecting their financial situations to be better a year from now jumped to 37.6%, an increase of about 8 percentage points from October, the central bank’s survey of approximately 1,300 heads of households showed. That was the highest reading since February 2020, just before the Covid-19 pandemic hit.

In conjunction with the rise of optimism, the level of those who expect their financial situation to get worse moved down to 20.7%, off nearly 2 percentage points from a month ago and the lowest since May 2021.

The results follow Trump’s Nov. 5 victory that will send him back to the White House for a second nonconsecutive term. The Republican has promised a menu of lower taxes and deregulation to boost growth.

Though the macro economy has showed solid growth through 2024, consumers remain stymied by price increases that spurred a cumulative increase in the consumer price index inflation gauge of more than 20% under President Joe Biden.

Even with the increase in sentiment, consumers’ inflation outlook is still cautious, according to the New York Fed Survey.

Inflation expectations at the one-, three- and five-year horizons all increased 0.1 percentage point, respectively rising to 3%, 2.6% and 2.9%. The Fed targets inflation at 2% but is still expected to lower its benchmark interest rate by a quarter percentage point when it meets next week.

Though Trump has made little mention of attacking the government’s debt and deficit load, the outlook there improved as well. The median expectation for growth in government debt was at 6.2%, down 2.3 percentage points from October and the lowest level since February 2020.

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Economics

DOGE comes for the data wonks

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7 hours ago

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March 30, 2025

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FOR NEARLY three decades the federal government has painstakingly surveyed tens of thousands of Americans each year about their health. Door-knockers collect data on the financial toll of chronic conditions like obesity and asthma, and probe the exact doses of medications sufferers take. The result, known as the Medical Expenditure Panel Survey (MEPS), is the single most comprehensive, nationally representative portrait of American health care, a balkanised and unwieldy $5trn industry that accounts for some 17% of GDP.

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Checks and Balance newsletter: Who is (or was) the smartest person in government?

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Economics

Consumer sentiment worsens as inflation fears grow, University of Michigan survey shows

Published

2 days ago

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March 28, 2025

By

A shopper pays with a credit card at the farmer’s market in San Francisco, California, US, on Thursday, March 27, 2025. 

Bloomberg | Bloomberg | Getty Images

The deterioration in consumer sentiment was even worse than anticipated in March as worries over inflation intensified, according to a University of Michigan survey released Friday.

The final version of the university’s closely watched Survey of Consumers showed a reading of 57.0 for the month, down 11.9% from February and 28.2% from a year ago. Economists surveyed by Dow Jones had been expecting 57.9, which was the mid-month level.

It was the third consecutive decrease and stretched across party lines and income groups, survey director Joanne Hsu said.

“Consumers continue to worry about the potential for pain amid ongoing economic policy developments,” she said.

In addition to worries about the current state of affairs, the survey’s index of consumer expectations tumbled to 52.6, down 17.8% from a month ago and 32% for the same period in 2024.

Inflation fears drove much of the downturn. Respondents expect inflation a year from now to run at a 5% rate, up 0.1 percentage point from the mid-month reading and a 0.7 percentage point acceleration from February. At the five-year horizon, the outlook now is for 4.1%, the first time the survey has had a reading above 4% since February 1993.

Economists worry that President Donald Trump’s tariff plans will spur more inflation, possibly curtailing the Federal Reserve from further interest rate cuts.

The report came the same day that the Commerce Department said the core inflation rate increased to 2.8% in February, after a 0.4% monthly gain that was the biggest move since January 2024.

The latest results also reflect worries over the labor market, with the level of consumers expecting the unemployment rate to rise at the highest level since 2009.

Stocks took a hit after the university’s survey was released, with the Dow Jones Industrial Average trading more than 500 points lower.

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