Eggs, cars, and stocks
29.01.2024 - 10:53
/ insider.com
Listen, I'm not saying that all the good vibes Americans are suddenly feeling about the economy boil down to stocks, gas prices, and eggs. But I'm also not not saying that.
In recent days, there's been a full-fledged victory party to celebrate the end of the "vibecession." Since November, the University of Michigan's consumer sentiment index has jumped by 29% — the largest two-month gain in over 30 years. People are more convinced that inflation will keep falling, and their outlook on their personal finances has also improved. In other words, consumers finally feel less terrible about everything.
There's been all sorts of hand-wringing over the past year about why Americans kept saying the economy was a disaster even if, on paper, things were actually pretty good. Was it partisanship? Did TikTok do it? Is America just uniquely broken in a way other countries are not?
Data-wise, the economic landscape today is not wildly different than it was, say, six months ago. The job market remains strong, inflation is coming down, consumer spending is solid, GDP growth continues, etc. But vibes-wise, something has changed in recent weeks. Americans are suddenly confident in the economic future again. So what gives?
The answer, I think, is fairly simple. What improved America's economic vibes was basically three things: the soaring stock market, falling gas prices, and eggs.
Let's start with stocks. Both the Dow and the S&P 500 hit record highs this month. Even for people who aren't investors — though, contrary to popular belief, most Americans hold stocks — good market news tends to be a mood booster across the board. A woo-hoo out of Wall Street is a smidge contagious, thanks to the wealth effect and the number of positive headlines soaring stocks generate. Basically, everybody is a little buoyed by a bull market.
As Jordan Weissmann at Semafor notes, the Federal Reserve Bank of San Francisco's index that tracks economic-news sentiment — the vibes generated by media coverage of the economy — started to tick up around the same time the stock market did last fall. It's not a perfect correlation, but market highs do sort of translate to a feeling of "Huh, well, things must not be that bad."
Then there's gas prices — the one price that's displayed prominently on giant signs all over the country. The current national average for a gallon is $3.096, per AAA, compared to $3.446 a year ago and down from a record high of over $5 in 2022. Gas prices are an economic reality that hits consumers especially hard. You can't choose to skip work or refuse to take your kids to school just because prices at the pump are killing you. Plus, there's the fact that America's public-transportation system is, um, lacking. Research shows