Listen, I'm not saying that all the good vibes Americans are suddenly feeling about the economy boil down to stocks, gas prices, and eggs. But I'm also not not saying that.
In recent days, there's been a full-fledged victory party to celebrate the end of the "vibecession." Since November, the University of Michigan's consumer sentiment index has jumped by 29% — the largest two-month gain in over 30 years. People are more convinced that inflation will keep falling, and their outlook on their personal finances has also improved. In other words, consumers finally feel less terrible about everything.
There's been all sorts of hand-wringing over the past year about why Americans kept saying the economy was a disaster even if, on paper, things were actually pretty good. Was it partisanship? Did TikTok do it? Is America just uniquely broken in a way other countries are not?
Data-wise, the economic landscape today is not wildly different than it was, say, six months ago. The job market remains strong, inflation is coming down, consumer spending is solid, GDP growth continues, etc. But vibes-wise, something has changed in recent weeks. Americans are suddenly confident in the economic future again. So what gives?
The answer, I think, is fairly simple. What improved America's economic vibes was basically three things: the soaring stock market, falling gas prices, and eggs.
Let's start with stocks. Both the Dow and the S&P 500 hit record highs this month. Even for people who aren't investors — though, contrary to popular belief, most Americans hold stocks — good market news tends to be a mood booster across the board. A woo-hoo out of Wall Street is a smidge contagious, thanks to the wealth effect and the number of positive headlines soaring stocks generate. Basically, everybody is a little buoyed by a bull market.
As Jordan Weissmann at Semafor notes, the Federal Reserve Bank of San Francisco's index that tracks economic-news sentiment — the vibes generated by media coverage of the economy — started to tick up around the same time the stock market did last fall. It's not a perfect correlation, but market highs do sort of translate to a feeling of "Huh, well, things must not be that bad."
What improved America's economic vibes was basically three things: the soaring stock market, falling gas prices, and eggs.
Then there's gas prices — the one price that's displayed prominently on giant signs all over the country. The current national average for a gallon is $3.096, per AAA, compared to $3.446 a year ago and down from a record high of over $5 in 2022. Gas prices are an economic reality that hits consumers especially hard. You can't choose to skip work or refuse to take your kids to school just because prices at the pump are killing you. Plus, there's the fact that America's public-transportation system is, um, lacking. Research shows that consumers feel more pessimistic when gas prices go up — James Surowiecki points out in The Atlantic that high gas prices also make people less happy and more likely to hate the president. If oil prices stay relatively low and, in turn, keep gas prices down, less exasperated drivers could help Joe Biden keep his job come November.
Which brings us to eggs. I know it seems a little weird to peg consumer confidence to something so mundane and seemingly inconsequential, but hear me out: High egg prices are something that really, really bug people. While consumers are price sensitive, they're not generally super price aware. As anyone who watches "The Price Is Right" can tell you, consumers can't really pinpoint the price of more than a handful of items they get on a regular basis. Eggs are one of those items.
Want to take a guess when people were Googling egg prices the most? Right around the time they were spiking in late 2022 and early 2023. According to the Bureau of Labor Statistics, a dozen grade-A large eggs ran about $2.51 last December; a year earlier, they were $4.25. The economic vibes, I would argue, are directly tied to the egg aisle at the supermarket.
So here's the big BUT of it all. Yes, the economic vibes are better, but they're still not awesome. Ask anyone in America how they're feeling about the cost of living right now, and I can guarantee you the answer is going to be something along the lines of "not great." Eggs and gas are still pricier than they were in 2019, as are most other things. The consumer sentiment index may have experienced a historic surge, but the latest reading of 78.8 isn't all that great compared to the Before Times.
Beyond our handy little trio of indicators, things could still go south, data-wise and sentiment-wise. Sure, economists and forecasters have chilled out on their recession calls, but almost all of them are careful to remind everyone that there are no guarantees. The Fed's interest-rate hikes are still working their way through the system. The labor market could start to weaken. There are all sorts of geopolitical threats and unknowns that could throw global trade and oil prices (and thus gas prices) into chaos. Anything and everything could spook investors.
And then there's the bird flu. Chickens are starting to get sick en masse again, which means egg prices are headed back up. And as eggs go, so goes the nation.
Emily Stewart is a senior correspondent at Business Insider, writing about business and the economy.