After a hectic 2022, it is instructive to review households’, executives’, and financial market agents’ expectations for the coming year.
Household expectations appeared to have stabilised after fluctuating widely this past year. The Gallup Consumer Confidence Index (CCI) measured just under 99 points in December, only a hair’s breadth from the 100-point threshold indicating parity between optimism and pessimism. Households’ expectations six months ahead concerning the economic and labour market situation measured just over 95 points, according to Gallup’s index calculations. This means that respondents who anticipate that the economy and labour market will be weaker at mid-year 2023 slightly outnumber those who expect an improvement. The chart below shows, however, that downbeat sentiment about the period ahead has often been far more widespread than it is now, as can be seen in the portions of yellow line below the equilibrium value.