Why 2024 could be a year of American optimism
American consumer confidence — still bizarrely low given how healthy the economy is — could be set for a substantial rebound in 2024.
Why it matters: Consumer confidence has historically been a good predictor of whether or not incumbent politicians will be re-elected. A rebound would therefore be good news for President Biden and Democrats more broadly.
The big picture: The U.S. boasts the strongest economy of any rich nation. The much-predicted 2023 recession failed to appear, employment has remained robust, real wages have been rising, and the outlook for 2024 is similarly healthy.
- Crime is also down substantially, with homicides falling at a near-record rate in 2023.
Between the lines: Americans are already showing signs of confidence and prosperity in their spending. They happily shelled out more money than ever on holiday gifts in December, for instance.
- As Axios' Matt Phillips has pointed out, people tend to spend a lot — especially on discretionary items like boats — when they're feeling optimistic about their ability to continue earning good money well into the future.
The other side: Consumer confidence is measured by surveys, and in today's politically bifurcated era, Republicans will overwhelmingly tell pollsters they have little faith in the economy so long as a Democrat remains in the White House.
- As a result, depressed consumer confidence numbers could reflect political divisions more than genuine cheerlessness over the national economy.
The bottom line: There's no good reason for low consumer confidence to continue indefinitely. As Stein's law says: "If something cannot go on forever, it will stop."