Americans’ Economic Optimism Hits Decade High, Fueled by Hopes for Falling Inflation and Strong Stock Market
Americans are more optimistic about the U.S. economy, stock market, and the prospect of declining inflation and borrowing costs than they have been in over a decade, according to a new Gallup poll released Monday. The survey, conducted in the first two weeks of January, reveals a surge in confidence that surpasses even the bullish sentiment seen during Donald Trump’s first presidency.
The poll, based on telephone interviews with about 1,000 adults, found that 53% of Americans expect the U.S. economy to grow over the next six months—the highest level of optimism since Gallup began tracking this metric in 2005. Additionally, 61% predict that stock prices will rise, marking the most positive outlook since the question was first asked in 2001. While 52% still anticipate inflation will increase in the coming months, this is the smallest share holding that view since 2003. Notably, 33% of respondents expect inflation to fall, a record-high proportion, and 41% foresee lower interest rates, outweighing the 35% who expect borrowing costs to rise.
This upbeat economic outlook aligns with the views of many economists and Federal Reserve policymakers. After raising interest rates aggressively in 2022 and 2023 to combat soaring inflation, the Fed began cutting rates late last year as inflation eased and the labor market showed signs of cooling. Most Fed officials project the U.S. economy will grow around 2.1% in 2024, slightly below the 2.8% pace of 2023 but above the long-term trend. They also expect inflation, measured by the personal consumption expenditures (PCE) price index, to decline from 2.6% in December to 2.5% by year-end, with unemployment rising modestly from 4.1% to 4.3%.
Despite the overall optimism, Americans remain divided on the job market outlook. The poll found that 38% expect the unemployment rate to rise, while an equal proportion anticipate a decline. However, confidence in the stock market’s performance was widely shared across demographics, including age, gender, income, political affiliation, and education levels.
Gallup senior editor Jeffrey Jones attributed the surge in optimism to several factors, including improved economic conditions and high expectations among Republicans for economic growth under a potential Republican president. The poll revealed a stark partisan divide, with 78% of Republicans predicting economic improvement in the coming months, compared to just 21% of Democrats.
“Optimism is on the upswing, driven in large part—but not solely—by high Republican expectations for economic prospects under a Republican president,” Jones said.
The findings underscore a growing sense of economic resilience among Americans, even as challenges like geopolitical tensions and trade uncertainties persist. With inflation easing, interest rates stabilizing, and the stock market rallying, many are hopeful that the U.S. economy is on a path to sustained growth in 2024. As the year unfolds, these positive sentiments could play a pivotal role in shaping consumer behavior and investor confidence.