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.
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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 situation 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, which 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 shown 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, rising to 3%, 2.6% and 2.9%, respectively. 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.