U.S. President-elect Donald Trump receives an award at the FOX Nation Patriot Awards Ceremony held at the Tills Center in Greenvale, New York on December 5, 2024.
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Optimism about household finances rose to the highest level in years in the wake of Donald Trump’s victory in November’s presidential election, according to a New York Fed survey released Monday.
According to a central bank survey of approximately 1,300 household heads, the number of households expecting their financial situation to improve one year from now has jumped to 37.6%, an increase of approximately 8 percentage points since October. This was the highest level since February 2020, just before the outbreak of the coronavirus pandemic.
Combined with the rise in optimism, the level of those expecting their financial situation to worsen fell to 20.7%, down nearly two points from a month ago and the lowest level since May 2021.
The result follows Trump’s victory on November 5, which will see him return to the White House for a second non-consecutive term. Republicans have promised a menu of tax cuts and deregulation to spur growth.
Although the macroeconomy is showing steady growth through 2024, consumers continue to be bothered by rising prices as the consumer price index inflation rate has increased by more than 20% cumulatively under President Joe Biden.
Despite rising sentiment, consumers remain cautious about their inflation outlook, according to a survey by the New York Fed.
Inflation expectations for 1, 3, and 5 years all rose by 0.1 percentage point to 3%, 2.6%, and 2.9%, respectively. The Fed, which has an inflation target of 2%, is expected to cut its benchmark interest rate by a quarter of a percentage point at next week’s meeting.
President Trump has said little about attacking the government’s debt and deficit burden, but the outlook has improved as well. The median forecast for government debt growth is 6.2%, down 2.3 percentage points from October and the lowest level since February 2020.
