WASHINGTON, D.C. -- Americans are the most optimistic they have been in the past seven years about several aspects of the U.S. economy, particularly economic growth and the stock market. Majorities of Americans expect both indicators of economic health to go up this year, while 41% are hopeful that interest rates will fall, exceeding the 35% saying interest rates will rise.
The public is divided over whether unemployment will increase (38%) or decrease (38%) -- although at a time of relatively low unemployment, the 21% expecting the rate to hold steady could be viewed as positive. A slim majority of Americans, 52%, predict that inflation will rise, but that is down significantly from recent years.
Multiple line charts. Americans' predictions for how five economic indicators will perform in the next six months. Americans are optimistic about the outlook for Economic growth, inflation rates, interest rates, unemployment and the stock market over the next six months.
Gallup has asked Americans to predict the six-month trajectory for these economic indicators in five of the past seven years -- in 2019, 2020, 2022, 2023 and 2025. Prior to that, it tracked the question nearly every month from October 2001 through 2005 and periodically between 2007 and 2014.
The latest results are based on a Jan. 2-15 survey, conducted shortly before President Donald Trump took office. Except for unemployment, Americans are more positive about these economic indicators than they were in 2019, during Trump’s first term, before the pandemic sent the economy into a brief but deep recession. The U.S. economy bounced back in 2021 but was plagued by inflation rates not seen in four decades. The Federal Reserve raised interest rates in an attempt to slow inflation. Meanwhile, unemployment has stayed low, economic growth has been steady, and the stock market has reached record highs.
Americans’ current outlook on the stock market is the most optimistic Gallup has recorded, while the percentages expecting interest rates, unemployment and inflation to worsen are among the lowest.
Republicans Fueling Optimism; All Party Groups Expect Stock Increases
Solid majorities of Republicans believe all five economic factors will improve over the next six months. This includes three-quarters who say the stock market and economic growth will increase over the next six months and six in 10 who say inflation and interest rates will go down. Nearly as many, 57%, expect unemployment to go down, while 20% believe it will go up.
Independents share Republicans’ positive expectations for economic growth and the stock market, but to a lesser degree. Six in 10 independents believe both will go up. However, more independents think that inflation will get worse (by going up) than predict it will improve (by going down), while they are divided on whether interest rates and unemployment will improve or worsen.
A slim majority of Democrats, 51%, believe the stock market will increase in the next six months, but only one in five expect economic growth to improve. Three-quarters of Democrats expect inflation to rise, perhaps because of Trump’s pledge to impose tariffs on U.S. imports. A majority of Democrats think the unemployment rate will increase, and close to half, 48%, think interest rates will rise.
Republicans and independents are more optimistic that all five aspects of the economy will improve than they were in January 2023, the last time the question was asked. This was at the midpoint of former President Joe Biden’s term. Slightly more Democrats now than in 2023 expect the stock market to increase and interest rates to decrease, but far fewer now expect economic growth, inflation and unemployment to improve.
Changes in Republicans’ outlook are generally larger than those for the other party groups, including a 59-percentage-point increase in the percentage expecting economic growth to improve (by going up) and a 49-point decrease in the percentage predicting inflation to improve (by going down). Those changes contrast with a 32-point drop in Democrats’ expectations for economic growth to improve -- the largest movement on any measure for Democrats -- and a 21-point shift on inflation.
Republicans’ expectations for economic growth and unemployment were similar to now in 2019, when Trump was president and the economy was generally healthy. Likely reflecting changing economic conditions since then, Republicans are more inclined now than in 2019 to believe the stock market will go up (75% vs. 58%) and to think interest rates (63% vs. 9%) and inflation (60% vs. 20%) will go down.
Bottom Line
Americans are generally hopeful about the economy in the next six months. Part of this optimism stems from Republicans expecting things to improve under a Republican rather than Democratic president. But the broader improvements in Americans’ outlook may also reflect their confidence in Trump’s ability to handle the economy. During his first term, he received some of his strongest issue approval ratings on the economy, which were typically higher than those Biden received on the issue during his term.
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