Analysis of economic indicators can be confusing, especially in an election year when political parties do their best to achieve the best results. However, this index rebounded among Republican and independent voters in February, while Democrats were less optimistic. Economic statistics reflect only the recent past, so they usually differ from consumer sentiment. Economic indicators for past performance can affect stock prices, but markets take this into account, along with all the information that flows to them almost instantly. In short, all these metrics measure different time frames. Additionally, individuals' political views are reflected in their feelings about the economy. The consumer confidence index released by the Conference Board rose by 2.2 points in February to reach 91.2 points. There are pressing issues that could hinder their economic progress. Secondly, if the economy is the central issue, is there enough time to improve the economic situation enough to influence voters' opinions before the midterm elections to achieve better gains? As is clear in the lives of ordinary American citizens, there are positive economic indicators. In the housing sector alone, the average sales price fell to $405,300 in the fourth quarter of 2025, compared to $419,300 in the fourth quarter of 2024. Finally, the stock market is measured 'in real-time,' meaning at the present moment. It remains unclear whether Democrats can abandon their core principles. If so, it is unlikely their sentiments will change, so Republicans should focus on keeping the morale of their supporters high, as well as that of independents. Looking ahead to the next eight months until the midterm elections, two questions related to the economy and elections stand out. First, will Democrats focus on the economy in their campaign? Previously, Democrats promoted the concept of 'affordability,' believing their victory in the gubernatorial elections in New Jersey and Virginia proved the effectiveness of this approach. Consumer confidence has declined, but economic indicators remain relatively strong. Democrats are making an effort to win over sentiment, while Republicans hope the facts will improve and that voters will absorb them by Election Day. A Gallup poll on American optimism reflects a similar partisan divide. The bottom line is: Democrats' sentiments seem to reflect more than just the economic situation. Based on this, what will America conclude as the U.S. midterm congressional elections in November approach? Recent polls of consumers and voters indicate dissatisfaction among Americans due to the economic situation. However, their anger at the actions of the Immigration and Naturalization Service and the subsequent irrational actions, unworthy of a democratic state, overshadowed their focus. It is worth noting that this led to the second partial government shutdown within a year. The consumer sentiment index reflects a relatively 'long' past and expected future, forming over a longer period of memory and expectations. Simply put: what happened in the past and what you expect to happen affect how you feel now. The Conference Board's consumer confidence index recently fell to its lowest level (84.5) since 2014. Unlike consumer indicators, economic indicators are relatively strong. Inflation in the U.S. slowed to 2.4% in January and remained at that level in February, down from 2.7% in December and below expectations. Average real weekly wages in the second and third quarters of 2025 reached levels higher than in the fourth quarter of 2024. Except for slight increases seen during the 2020 pandemic, these are the highest levels ever, meaning Americans are earning more in real terms. Gallup found that life satisfaction is currently low, with only 62% of Americans saying they are satisfied with their life situation. The Rasmussen Reports polling firm, which focuses on communities in democratic countries, found that more than a year into President Donald Trump's second term, 56% of those surveyed said their situation has not improved yet. The average 30-year fixed mortgage rate fell to 6% on February 26, after being 6.96% on January 25, 2025. Will this decline continue, and will it be enough? The whole matter boils down to a struggle between sentiment and facts, and facts take a long time to influence sentiment. The stock market regularly hit new record highs in 2025. According to Gallup polls, only 59% of Americans expect a decent life in the next five years, the lowest level since Gallup began asking this question about 20 years ago. The unemployment rate fell to 4.3% in January before rising slightly to 4.4% in February, but it remained low and within a narrow range since November 2024. The U.S. economy grew at a staggering rate of 4.4% in the third quarter and 3.8% in the second quarter of 2025, the two largest consecutive quarterly gains since the economic recovery affected by the COVID-19 pandemic in late 2021. Other indicators, such as the S&P 500, Nasdaq, and Russell 2000 indices, showed strong performance in the stock market. Given the above, what is the reason for all this? And what is the cause of this discrepancy? One reason is the time lag among these three metrics. The Dow Jones Industrial Average crossed the 50,000-point mark for the first time on February 6. While the fourth quarter of 2025 performed slowly at 1.4%, dropping one percentage point due to the government shutdown, the average growth over the last three quarters was 3.2%, a strong rate by any measure. Stock prices regularly hit new highs in 2025.
