The Commercial Real Estate Alpha Site

Vibe shift … The latest University of Michigan Consumer Sentiment Survey paints a polarized picture of economic optimism in the wake of Donald Trump’s election. Overall sentiment climbed to 74 in December, up from 71.8 in November. However, a deeper dive reveals sharp divisions across party lines. Republican optimism skyrocketed to 81.6, its highest since November 2020, while Democrat sentiment plummeted to 70.9, its lowest since September 2020.

Image via The Oregon Group

The survey highlights Republicans’ belief that Trump’s presidency will curb inflation and boost the economy. Meanwhile, Democrats voice concerns that proposed policies, such as tariff hikes, could reignite inflation. Notably, future inflation expectations among all groups rose to 2.9%, the highest in six months, signaling apprehension about price stability. Interestingly, consumers report improved buying conditions for big-ticket items, driven by expectations of future price hikes. “This rise in durables was primarily due to a perception that purchasing now would avoid future increases,” explained Joanne Hsu, director of the Michigan survey. This divergence aligns with the broader concept of a “vibecession,” coined by economist Kyla Scanlon. Unlike traditional recessions defined by GDP contractions, a vibecession reflects how collective mood influences economic behaviors. When optimism reigns, spending surges; when worry dominates, growth slows—even without hard data backing either trend. As the Federal Reserve eyes inflation expectations closely, the question remains: Can optimism alone steer the economy, or will reality catch up?