The disconnect is further evidence of the k-shaped recovery, in which some Americans are facing major improvements, while others are still suffering.
For example, a A recent University of Michigan consumer survey found that households earning less than $ 75,000 a year felt particularly pessimistic about their financial future in February.
Meanwhile, the CEO’s confidence stood at 73 points in the first quarter of the year, marking the highest level in the same period since 2004, according to the Conference Board.
What makes business leaders so optimistic while many workers feel differently? CEOs believe that the pay outlook has improved and the potential for layoffs is lower. Only 12% of executives surveyed said they expect a reduction in the workforce in the next 12 months, down from a strong 34% in the fourth quarter.
Also, 82% of executives expect the economy to improve in the next six months, a jump from 63%.
“With the launch of the vaccine in the big economies, executives have entered 2021 from a historically optimistic point of view,” said Dana Peterson, chief economist at the Conference Board.
Moreover, the stock market is close to records, with Dow (UNJUST) ticking a new record on Wednesday and the company’s valuations rising. The strength of the market is due to the hope of a greater government stimulus to revive the economy, as well as the launch of vaccines across the country.
Goldman Sachs (GS) predicts gross US domestic product – the broadest measure of economic activity – will increase this year, at the fastest pace since 1989. Meanwhile, Federal Reserve interest rates remain near zero, so it is cheaper for companies to borrow or refinance their debts.
CEOs could be at odds with their optimism. But for millions of Americans, stock market highs don’t really make a difference in their lives.
More than 18 million people have benefited from various government programs in the last week of January, the Labor Department said on Thursday.
Economists fear the effects of long-term unemployment on the economy; the more workers are left without a job, the less likely they are to return to work.
Meanwhile, many of those returning to work have seen their hours or wages cut, or maybe both, as the pandemic economy exacerbates American inequities.
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