Americans clearly dislike the Joe Biden economy. They’re not feeling a lot better about the soon-to-arrive Donald Trump economy, either.
Consumer confidence dropped from November to December by a significant margin, according to the Conference Board’s latest monthly survey. The biggest change was in the economic outlook. The portion of respondents expecting economic conditions to improve dropped from 24.7% to 21.7%. Those expecting conditions to worsen rose from 15.9% to 18.3%. Overall, the board’s expectations index is barely above levels associated with a recession.
The expectations index has been stuck around recessionary levels since 2022, when inflation peaked at a punishing 9%. In November, the economic outlook looked like it might be ready for a breakout when it hit the highest level in 35 months. That survey included responses gathered after Trump won the presidential election. Since many voters picked Trump hoping he’d be better for the economy than Kamala Harris, it made sense that some Americans saw a brighter future once they knew Trump would be the next president.
Except now, they don’t. The economic outlook is back to where it was in July, the month Biden dropped out of the presidential race, to be replaced by Harris. The underlying economy has improved since then. Inflation is lower and the Federal Reserve has started cutting short-term interest rates. Employers have created 600,000 new jobs and the stock market has drifted ever higher. Americans aren’t feeling it.
Biden struggled with an economy that was the strongest in the developed world, yet plainly unsatisfactory to his own electorate. The obvious reason was the elevated cost of food, rent, and gasoline. Trump should be poised for a fresh start. Inflation has dropped from 9% to 2.7%, and Trump can convincingly lay the whole problem on Biden. Solid fundamentals should provide Trump with an economic tailwind the moment he takes office on Jan. 20.
One group of voters is clearly more optimistic: Republicans. After Trump won, Republican optimism soared in the University of Michigan sentiment survey, while Democratic spirits sank. Independents didn’t change their outlook much. Overall, the Michigan survey shows a slight improvement in confidence from November to December. Yet, as in the Conference Board survey, the economic outlook deteriorated.
One thing that seems to be happening is consumers are bracing for price hikes once Trump delivers the tariffs on imports he has been threatening. In its latest survey, the Conference Board asked a one-time question on tariffs, and 46% of respondents said they expect Trump’s trade duties to raise living costs. In Michigan’s latest survey, the portion of respondents saying they expect large household purchases to get more expensive jumped from 10% in November to 22% in December, the highest level in polling that goes back to 2008.