Brighter Consumer Outlook Signals Good News For White House

Consumers say they feel more optimistic and think inflation will be lower ahead, continuing a trend of upbeat economic news for a White House that’s politically vulnerable on the economy.

The University of Michigan’s monthly consumer sentiment index rose to 78.8 in the preliminary reading for January, which was issued Friday . That’s the highest level since July 2021, when the economy was still coming back strongly from the onset of the COVID-19 pandemic.

“Consumer views were supported by confidence that inflation has turned a corner and strengthening income expectations,” said Surveys of Consumers Director Joanne Hsu in a statement. “Over the last two months, sentiment has climbed a cumulative 29%, the largest two-month increase since 1991 as a recession ended.”

The White House, which has suffered politically from a gap in how people say they feel about the economy and bullish economic data , took a victory lap.

“President [Joe] Biden is making progress lowering inflation while maintaining a strong job market: wages have risen faster than inflation for 10 months in a row, 14.3 million jobs have been created, and inflation has fallen by about two-thirds,” said Jared Bernstein, the chair of the White House’s Council of Economic Advisers, in a statement.

“We have more work to do, but we’re on the right path as we execute President Biden’s agenda, and people are starting to feel it.”

The Michigan sentiment index is one of the oldest and most high-profile trackers of how consumers are feeling. Another, the consumer confidence index from the Conference Board business think tank, similarly showed a gain in December , the latest data available.

Both indices survey people on their assessments of the current economy and