Consumer Sentiment Rebounds as Inflation Fears Fade, Though Partisan Divide Widens

The "vibecession", a term for when consumer sentiment is low despite good economic data, seems to be ending as measures of consumer confidence have rebounded recently.

Much of the improvement is due to declining inflation, which has fallen from 8.9% to 3.3% since mid-2022. Expectations for future inflation have also come down.

The University of Michigan's consumer sentiment index rose over 9 points between December and January, reaching its highest level since July 2021, though still below historical expansionary averages.

Both Democrats' and Republicans' economic outlooks have improved recently, but the partisan gap in sentiment has widened, with Democrats more enthusiastic.

The end of the vibecession could be good news for President Biden ahead of the 2024 election.