Americans’ Economic Confidence Is Returning. Will Biden Benefit?

Low approval ratings and rock-bottom consumer confidence figures have dogged President Biden for months now, a worrying sign for the White House as the country enters a presidential election year. But recent data suggests the tide is beginning to turn.

Americans are feeling more confident about the economy than they have in years, by some measures. They increasingly expect inflation to continue its descent, preliminary data indicates, and they think interest rates will soon moderate.

Returning optimism, if it persists, could bolster Mr. Biden’s chances as he pushes for re-election — and spell trouble for former President Donald J. Trump, who is the front-runner for the Republican nomination and has been blasting the Democratic incumbent’s economic record.

But political scientists, consumer sentiment experts and economists alike said it was too early for Democrats to take a victory lap around the latest economic data and confidence figures. Plenty of economic risks remain that could derail the apparent progress. In fact, models that try to predict election outcomes based on economic data currently point to a tossup come November.

“We’re still very early in the election cycle, from the perspective of economic factors,” said Joanne Hsu, who heads one of the most frequently cited sentiment indexes as director of consumer surveys at the University of Michigan. “A lot can happen.”

The University of Michigan’s preliminary survey for January showed an unexpected surge in consumer sentiment: The index climbed to its highest level since July 2021, before inflation surged. While the confidence measure could be revised — and is still slightly below its long-run trend — it has been recovering quickly across age, income, education and geographic groups over the past two months.