As recent consumer sentiment surveys have demonstrated, political ideology plays a huge role in coloring how Americans view economic confidence. The Biden administration recently took to calling this phenomenon the “Vibecession.” This phrase encompasses a popular expression of economic pain. It illustrates how people are largely out of touch with the economic realities of one of the best performing economies in the nation.
GfK’s Consumer Confidence Barometer has been tracking consumer sentiment for more than half a century. For example, just last week, it announced that Democrats’ economic confidence has jumped from 67 to 96 since the Trump handover to Biden. In sharp contrast, Republicans’ confidence has tanked from 100 to 59 over the same period. This extreme split indicates that party identification deeply influences how people with this bias view the state of the economy.
In the UK too, the same generational divide rings true, reflecting the differences in economic fortunes across age groups. Young adults, generally leaning towards the liberal left, express greater satisfaction with the current government, particularly after participating in the 2024 election. This underappreciated demographic is currently rebounding from various crises that have characterized this entire decade. In fact, they appear to be much more optimistic than their baby boomer and Gen-X counterparts.
Older Britons seem to be going through a reverse boom in economic confidence. Many have accumulated significant savings—nearly reaching a double-digit savings rate—but are hesitant to spend, largely due to despondency regarding the country and its economic trajectory. The Liz Truss mini-budget in September 2022 ramped up anxiety for everyone, young or old. With all that uncertainty, consumer confidence tanked in the months after the Brexit vote as well as throughout the COVID-19 pandemic.
Young adults are uniquely optimistic about their economic circumstances compared to older young adults. Inflation in the UK is going the right way, heading down towards the target of 2%. This generational divide is key, as it may deepen and continue to shape consumer preference in the years to come.
The current economic landscape is a portrait of confidence, or lack thereof, at the most disparate terms across race, gender and income. Mitchells & Butlers boasted of their best-ever performance over the Christmas period, with “like-for-like growth of 7.7%.” Similarly, Fullers highlighted an “outstanding five-week Christmas and New Year season across all parts of the estate,” noting an 8% increase over last year’s already robust festive period. Data points like these show that despite some sectors booming, the overall mood is more mixed and divided.
“traded very strongly across the festive season with like-for-like growth of 7.7%.” – Mitchells & Butlers
“outstanding five-week Christmas and New Year season across all parts of the estate”, 8% up on an already strong festive period last year – Fullers