The U.S. economy has shown solid growth as President Donald Trump settles back onto the political stage, but beneath the surface, public sentiment remains mixed about the administration's policies. The economy expanded at an annual rate of 2.3% during the last quarter of 2024, according to data released by the Commerce Department.
This growth is largely attributed to strong consumer spending, which accounts for more than two-thirds of the U.S. economy. Mark Zandi, chief economist at Moody's Analytics, remarked, "The consumer is driving the economic train." Consumer expenditure surged as Americans, buoyed by low unemployment and increasing wages, opened their wallets for both goods and services.
Despite these positive indicators, public sentiment tells another story. The Democrats' unfavorability rating hit its highest mark since 2008, reaching 57%, according to the Economic Times. Concurrently, the Republican Party's favorability rating has climbed to 43%. This shift was noted following the 2024 elections, where the country experienced significant rightward movement across all states.
Trump’s strategies have elicited strong reactions. For example, the decision to deploy troops to the U.S.-Mexico border earned him a 60% approval rating. Conversely, proposals related to citizenship for children of undocumented immigrants face resistance, with 61% of the electorate supporting automatic citizenship for these children.
Consumer spending during the final months of 2024 indicates resilience, as reflected by the 4.2% increase rate during the fourth quarter, which is the fastest pace since early 2023. Spending on big-ticket items jumped at over 12% as consumers rushed to purchase goods before any new tariffs hit. Nevertheless, Diane Swonk, KPMG's chief economist, warned, "The economy continues to look beter on paper than it feels to most Americans," pointing to the chasm between reported growth and everyday economic experiences.
The rising cost of living continues to pinch many households. Even as inflation eased somewhat, the feelings of unease among American families remain palpable. According to reports, some individuals have begun to draw down on savings accumulated during the pandemic. Meanwhile, reports also indicate consumer confidence dipped to its lowest level since September 2024.
Trade issues loom large as analysts predict potential tariffs against key trading partners like Canada, Mexico, and China. Bernard Yaros of Oxford Economics cautioned, "The biggest risk to our 2025 forecast is an immediate imposition of across-the-board tariffs on key trading partners," stating the tariffs could shave more than 1% off GDP growth this year.
The interplay between consumer sentiment and economic growth metrics suggests uncertainty looming over the economic outlook. A consensus view holds the atmosphere of consumer confidence could shift based on how the administration navigates upcoming policies impacting trade relations and domestic financial stability.
Despite these concerns, some experts believe the fundamentals of the economy are strong. Will Compernolle, macro strategist at FHN Financial, opined, "This report will assure the Fed policy was not overly restrictive last quarter," implying confidence about the economy's current footing.
Finally, as Trump embarks upon his second term, his administration is also inheriting substantial economic challenges. With mixed public sentiment and the ever-looming possibility of trade disruptions or tariff systems, he faces the task of not only fostering growth but also managing expectations of American citizens who remain cautious about the economic potential.