US Household Outlook Optimism Rises After Trump Victory... Highest Since February 2020

After Donald Trump was elected President of the United States on November 5, optimism that household financial conditions will improve in the U.S. reached the highest level in about five years.

According to a consumer outlook survey released on the 9th (local time) by the Federal Reserve Bank of New York, the proportion of households expecting their financial situation to improve in one year was 37.6%. This is about 8 percentage points higher than the previous month's survey and the highest level since February 2020, just before the outbreak of the COVID-19 pandemic. On the other hand, the percentage of households expecting their financial situation to worsen was 20.7%, the lowest since May 2021.

This optimism is analyzed to be due to Trump’s election victory. President-elect Trump and the Republican Party promised large-scale deregulation and tax cuts to promote growth. The economic media outlet CNBC reported, "As optimism rises, optimism about household finances has reached the highest level in years." The survey was conducted among 1,300 households in the United States.

However, despite this optimism, concerns about consumers’ inflation expectations remain.

The expected inflation rate, which reflects how much U.S. consumers anticipate prices will rise over the next year, increased by 0.1 percentage points from the previous month to 3%. The expected inflation rates over three years and five years also rose slightly, recorded at 2.6% and 2.9%, respectively.

This indicates that achieving the Federal Reserve’s (Fed) inflation stability target of 2% is seen as difficult. Locally, there are growing concerns that tariffs driven by Trump’s "America First" policy may actually push prices higher within the U.S.