Americans are upbeat about future
Many feel hopeful about new Biden administration
Consumer sentiment rebounded sharply — and surprisingly — in December on the heels of Joe Biden’s election win, which outweighed worries about the coronavirus pandemic, the University of Michigan’s Survey of Consumers showed Friday.
An early reading of the consumer sentiment index for December came in at 81.4 points, up from 76.9 points in November. Economists had expected a slightly lower reading for the final month of the year. Before the pandemic, the consumer sentiment index stood at 101 points, a two-year high.
The survey measures people’s assessments of their own current and expected financial situation, as well as business and economic conditions for the country.
“Following Biden’s election, Democrats became much more optimistic, and Republicans much more pessimistic, the opposite of the par
tisan shift that occurred when Trump was elected,” said Richard Curtin, the survey’s chief economist.
This sudden optimism is too extreme to be justified by economic fundamentals, Curtin said, just as it was when Trump was elected.
The election outcome outweighed worries about how the economy might fare during the winter months given the resurgence of Covid-19 infections. Even as the distribution of vaccines is expected to start soon, the disease is still spreading and slowing down the recovery.
Consumers feel more upbeat about current economic conditions despite the fact that joblessness is still rampant in America, said Michael Pearce, senior US economist at Capital Economics, in a note to clients. Claims for unemployment benefits rose to their highest level since mid-September according to Thursday’s Labor Department report. It was the third increase in four weeks.
As the virus spreads and pandemic relief measures including expanded unemployment benefits are due to expire in a matter of weeks, it’s hard to see how things won’t get worse in the short term.
Economists, business owners and jobless workers are waiting on Washington to agree on at least some stimulus measures before Christmas to avert the impending cliff. Time is running out.