Read our January 8th report: Rise in Household Assets

Consumer sentiment posted trivial declines in early January despite the horrendous rise in covid-19 deaths, the insurrection, and the impeachment of Trump. Two offsetting shifts helped narrow the January loss in sentiment: the covid-19 vaccines and a partisan shift in expectations due to the anticipated impact of Biden's economic policies. Importantly, covid's threats to physical and mental health were seen in January as more important than its financial repercussions. The partisan shift in expectations was due to anticipated changes in economic policies; the shift was as large as the opposite shift that accompanied Trump's election. Among identical respondents in June and December, the partisan gap in the Expectations Index amounted to a 74.6 Index point shift in 2016 and by a nearly identical but opposite shift of 74.0 points in 2020. Even in the January 2021 survey, the partisan gap among identical respondents remained largely unchanged at 72.2. The Trump and Biden partisan gaps in expectations are too extreme to be justified by economic fundamentals. Rather, the partisan gaps are rooted in sharply different policy preferences, with one side favoring economic growth and efficiency, and the other side giving top priority to greater equity and fairness in the distribution of income and wealth. Nonetheless, the most critical task for Biden is to not only accomplish his promised vaccination of 100 million in his first 100 days, but to accelerate on that pace for the balance of the population.