Americans Positive About Their Own Finance but Less on the Economy (Federal Reserve Survey)

A poll by the Federal Reserve Survey of Household Economics and Decision Making found that Americans in general are feeling fairly optimistic about their own personal finance but less about the economy in general. This is interesting because for the most part the economy has been pretty strong and personal finances seemed to have felt more shaky. The animal spirits might be at work again.

Pessimism chokes the desire to buy new products and services so it could have some impact on the economy. The extent of that is not well known but might not be significant unless such pessimism is long term. According to survey Americans feel ok 72% National Economy Good or Excellent 22%

A good easy to understand article you can read, The Great Nonpartisan Divide That is Plaguing Americans

Interesting, this piece of research below indicates that within developed capital markets positive sentiment has a minimal impact while in underdeveloped markets the impact of sentiment might be prolonged. One might wonder if the reverse is true as well. The difference is based on the strength of market fundamentals and efficient quick corrections. Sentiment, Productivity, and Economic Growth.

Let us go back to the survey. It looks like they use "ok" but if one were to move the category to "excellent or good" the numbers may not be exactly the same. The way we define the category is important for the end results. The survey information helps us think about sentiment's impact on the economy and how people categorize those sentiments.

In a country the size of the U.S., less confidence would indicate some impact but would be expected to be short-lived. Prolonged inflation, partisanship or geopolitical issues could confound the feeling of optimism. The article also brings up some of the changes in purchasing behaviors based on economic sentiment. I don't know about you but I weigh and balance life purchases all the time. I suspect you are the same.

No one wants to purchase expensive products unless they are feeling good about their futures so the lower feelings about the economy and higher feelings about personal finance are a mixed bag. I'm curious how the economic community and analysts are going to see mixed sentiment. For now it would seem that as a highly developed nation we have some resilience.

Source Federal Reserve