Recent economic reports suggest that Americans are feeling more optimistic about the economy. Inflation rates have been low and stable for the past year, bolstering consumer confidence. Job growth has been steady, wage gains have been modest, and consumer spending has inched higher. In fact, the country’s gross domestic product (GDP) grew at an annual rate of 3.2 percent in the final quarter of 2018, reversing some of the slower growth seen in the beginning of the year.
This improved outlook is also having a positive impact on consumer sentiment. According to the Federal Reserve Bank of New York, consumer sentiment has climbed to its highest levels since 2013. Americans are increasingly confident in the economy, because of low unemployment, stable prices, and growing wages.
At the same time, Americans are still somewhat anxious about rising interest rates. The Federal Reserve began hiking interest rates in December 2015, and they have risen steadily since then. Higher borrowing costs can eat away at any gains from wage increases.
The good news, however, is that inflation remains relatively stable. The Consumer Price Index (CPI) rose by 0.2 percent in March, which, although higher than expected, is markedly less than the 0.5 percent increase the previous month. The rise in inflation was driven mostly by rising prices for gasoline, which tend to be volatile and are not reflective of core inflation. Core inflation, which excludes more volatile items such as energy and food, was just 1.8 percent, the same as it has been since October.
Overall, Americans appear to be feeling better about the economy and inflation. They are buoyed by low unemployment, steady job growth, and modest wage gains, combined with low and stable inflation. As the outlook for the future remains stable, Americans will likely remain optimistic.