Summer Brings in a New Wave of Optimism
Inflation has gone down within the past couple of months by 3%, which has brought in a new wave of optimism.
According to J.P. Morgan, inflation was surging. Gasoline prices were high. The housing market was at a standstill. The stock market was down and crypto prices had collapsed. Consumer sentiment (as measured by the University of Michigan) hit its worst levels on record. That means that last summer, U.S. consumers felt worse about the economy than they did during the COVID-19 lockdowns, the Global Financial Crisis, the Tech bubble bust or the Volcker recession.
This summer, we are seeing a big positive vibe shift. So why is everyone feeling better all of a sudden?
Let’s start with what hasn’t happened. We still haven’t had the recession that many thought was inevitable. The U.S. government reached a benign agreement to raise the debt ceiling and avoid a default. The March bank failures haven’t led to a material credit crunch. Neither have high-profile problems in office buildings in San Francisco, Chicago or New York (at least not yet).
Now, a look at what has happened. Inflation is coming down (about 3% year-over-year). So are gasoline prices (about $3.55 per gallon). Home prices are rising again (after eight months of declines starting in July 2022). The stock market has rallied to within 5% of its all-time high, and even crypto has bounced back. Consumer sentiment has seen one of its largest year-on-year jumps on record.
