US Markets
Tuesday, December 19th, 2023 2:57 pm EDT
Key Points
- Holiday Spending Surge Amid Economic Concerns: The CNBC All-America Economic Survey reveals a significant increase in intended holiday spending per person, reaching $1,300 this year, which is 31% higher than the previous year. Despite a continued economic slump and negative views on President Joe Biden’s job approval, 18% of respondents express their intention to spend more during the holidays, with reasons ranging from higher incomes (32%) to concerns about inflation (24%). This surge in holiday spending contrasts with overall economic pessimism.
- Divergence Between Economic Sentiment and Data: The survey highlights a growing divide between negative American economic sentiment and positive economic data. While multiple surveys indicate downbeat economic views, actual data reflect robust consumer spending, surging third-quarter growth, a low unemployment rate, and strong holiday spending. Modest improvements in views on the economy are noted in the survey, but sentiments remain mostly depressed, with 80% viewing the economy as fair or poor.
- Inflation as a Dominant Concern Impacting Approval Ratings: Inflation emerges as a key driver of economic sentiment, with 30% of respondents identifying it as the top national issue. Despite a decline in inflation numbers, there is a persistent concern, indicating that Americans may be more focused on the fact that prices remain high than the rate of inflation decline. President Biden’s approval ratings, particularly on the economy, hit a new low, with 35% overall approval and 33% economic approval. Inflation is followed by immigration and border security as significant concerns, contributing to Biden’s declining support, particularly among key demographics like younger women, independents, and Latinos.
The CNBC All-America Economic Survey presents a complex picture of American sentiment during the holiday season. Despite a continued slump in economic views and increasingly negative opinions on President Joe Biden’s job performance, holiday spending plans appear robust. The survey indicates that the intended holiday spending per person has significantly increased to $1,300 this year, marking a 31% rise from the previous year. Even when accounting for a small number of respondents planning significant expenditures, the double-digit gains persist.
Interestingly, 18% of respondents express the intention to spend more during the holidays, a notable increase from the 11% reported in the previous year and the highest since 2019. Among those planning increased spending, 32% attribute it to higher incomes, while 24% cite inflation as a reason, marking a 6-point decrease from the previous year. Conversely, 37% of those planning reduced spending attribute it to inflation, a substantial increase from the 15% reported last year.
This divergence between negative economic sentiment and positive economic data is highlighted, as other surveys reflect pessimistic views while actual economic indicators, such as robust consumer spending, show strength. The CNBC Survey indicates some improvement in overall economic views, with 80% viewing the economy as fair or poor, a 3-point decrease from October, and 19% rating it as excellent or good, a 3-point increase. However, these levels remain significantly lower than the pre-pandemic levels in December 2019.
Although there is a slight improvement in the economic outlook, with 24% expecting improvement compared to 19% in October, it remains below the 30% reported in 2019. For the full year, a record 66% of Americans express negativity about the current state of the economy and its outlook.
Inflation emerges as a key driver of economic sentiment, with 30% identifying it as the top national issue, down only slightly from the previous quarter. This suggests that Americans may be less concerned about the rate of inflation decline and more focused on the fact that prices remain high. Immigration and border security, followed by foreign policy and national security, also rank high among the leading issues.
President Biden’s approval ratings are at a new low, with an overall approval rate of 35%, the lowest recorded by CNBC during his presidency. Economic approval, at 33%, is even lower, with disapproval at 62%, emphasizing the challenging landscape for the President. The survey indicates a widening lead for former President Trump in a head-to-head matchup, with erosion of support for Biden among key demographics, including younger women, independents, and Latinos.
Despite Biden’s declining approval, Democrats do not rally behind him as Republicans did for Trump during his tenure. Democratic approval of the president on the economy has declined to 70%, down 10 points from the previous year, in contrast to Trump’s consistent near-90% economic approval among Republicans.
In summary, the survey captures a dichotomy in American sentiment, with upbeat holiday spending plans amid persistent economic concerns and declining confidence in the current administration. The influence of inflation on consumer behavior and the political implications of these economic perceptions underscore the complexity of the current economic landscape.
For the full original article on CNBC, please click here: https://www.cnbc.com/2023/12/19/holiday-spending-to-be-up-big-even-as-approval-of-biden-hits-new-low-cnbc-economic-survey-shows.html
