In a recent visit to Axios, Neel Kashkari, president of the Minneapolis Federal Reserve, discussed the latest inflation data, revealing that the Consumer Price Index rose to two point six percent over the twelve months ending in October, up from two point four percent in September. He highlighted the persistent impact of high rents, which increased by four percent in October alone and are up by four-point nine percent over the past year. Kashkari noted that while inflation pressures have eased significantly over the last two years, the housing sector remains a challenge, often referred to as the “Achilles’ heel” of inflation data. He also expressed uncertainty regarding the economic implications of President-elect Trump’s proposed policies on deportations and tariffs, emphasizing that the actual effects on inflation and the labor market remain unknown.
And revealing that sentiment is just that, sentiment, In a recent analysis, Axios highlights the impact of politics on consumer sentiment, revealing that Republican optimism surged following Donald Trump’s election victory, with consumer sentiment hitting 100.6 on November 11, according to the Morning Consult Consumer Sentiment Index. This marks a significant shift as sentiment had been negative among Republicans prior to the election.
Why do we care?
Your sentiment on the economy may be tied to political affiliation. Expect some shifts in business owner strategies – some may now lean in, other businesses may delay IT spending as they assess the risk of increased costs, supply disruptions, or changes in consumer demand. Additionally, The sharp rise in Republican optimism may not translate into sustained economic growth or spending, as it is driven more by post-election enthusiasm than tangible economic changes.
Use political sentiment as a secondary input rather than a primary driver in forecasting tools to avoid overreacting to short-term mood swings.