Positive Outlook on Economy
Americans are experiencing a modest boost in optimism about the state of the U.S. economy, according to a recent survey by Gallup. The findings, released on Tuesday, reveal that monthly ratings of national economic conditions reached their highest level in two years in January, although they still remain in negative territory. Approximately 45% of Americans rated the current economic climate as poor, while only 25% described it as excellent or good. An additional 29% considered the conditions to be fair.
This slight improvement comes after December’s survey, where 22% of adults rated the economy as excellent or good. The increased optimism primarily stems from Democrats, with 54% of them rating the economy as good or excellent in January. In contrast, only 8% of Republicans and 21% of independents shared the same sentiment.
Inflation Continues to Cause Financial Hardship
Despite the slight improvement in Americans’ views of the economy, a significant majority still face financial hardships due to high inflation. The survey data from January 2 to January 16 reveals that about 63% of U.S. adults reported that recent price increases have caused financial difficulties for their families. Among those, 17% consider it a severe hardship affecting their ability to maintain their current standard of living. Only 37% of Americans do not see inflation as a problem.
Although inflation has decreased from its peak of 9.1% in June 2022, it remains well above the Federal Reserve’s target of 2%. Compared to January 2021, prices have surged by a staggering 17.6%. These high prices put significant financial pressure on households, particularly when it comes to everyday necessities like food, rent, and energy. Food prices have risen by 33.7% since the beginning of 2021, while shelter costs have increased by 18.7%. Energy prices have also seen a significant jump, rising by 32.8%.
The burden of high inflation falls disproportionately on low-income Americans, who are more heavily impacted by price fluctuations. Around 76% of lower-income households reported high prices as a hardship, compared to 65% of middle-income households and 54% of higher-income households.
Challenges for President Biden
These latest findings from Gallup coincide with ongoing pessimism among U.S. households regarding their financial situation under President Biden’s administration. A recent survey published by Bankrate reveals that 50% of Americans believe their financial situation has worsened since the 2020 presidential election. In comparison, only 21% think their financial situation has improved, while 26% believe it has remained unchanged.
“Views of the economy remain largely negative, particularly among Republicans and independents, which could spell trouble for Biden as he seeks reelection,” the Gallup survey stated.