Americans are feeling surprisingly upbeat about the stock market and broader economy, even as they remain pessimistic about inflation and unemployment, according to a recent Gallup poll. This mixed economic outlook reveals a nation with divergent expectations for 2026 — and stark partisan divides shaping those views.
The January survey found that half of Americans expect the stock market to rise in the coming months, while just 25% anticipate a decline. Similarly, 49% forecast economic growth compared to 36% who predict contraction. These findings represent a notable rebound from the pessimism that swept the country last spring amid market turbulence triggered by President Donald Trump’s tariff policies, though optimism remains below earlier peaks.
Split Economic Sentiment
The contrast between Americans’ outlook on growth versus everyday economic pressures is striking. While optimism prevails regarding the stock market and GDP, a clear majority (62%) expect inflation to increase, and half believe unemployment will rise in the months ahead. Views on interest rates are more divided, with 41% expecting rates to fall and 36% anticipating increases, according to the poll conducted between January 2-17.
“Americans broadly anticipate continued economic strain,” Gallup noted in its analysis, highlighting the seemingly contradictory expectations for both growth and worsening conditions in key areas affecting household finances.
What’s behind this economic cognitive dissonance? Party affiliation appears to be the driving factor. Republicans express overwhelming optimism across every economic measure, with positive outlooks ranging from 59% on inflation to a striking 82% on economic growth. Democrats, meanwhile, are evenly split on stock market prospects but overwhelmingly pessimistic on other indicators, with as many as 86% expecting inflation to worsen. Independents generally align more closely with Democrats in their economic outlook.
Turbulent History
The current readings come after a roller-coaster of economic sentiment. Last April, Americans’ optimism about the stock market plummeted 32 percentage points — from a record 61% to just 29% — amid global market volatility that followed President Trump’s expanded tariff policies. Economic growth expectations followed a similar pattern, dropping to 38% before largely rebounding to current levels.
Gallup has been tracking these economic indicators sporadically since October 2001, though notably, no measurements were taken during the Great Recession of 2007-2009. The current readings suggest a population that’s cautiously optimistic about economic fundamentals but worried about kitchen-table issues.
These mixed signals extend beyond the Gallup survey. A recent Pew Research Center poll found that about four-in-ten Americans (38%) expect economic conditions to deteriorate over the next year, while just 31% anticipate improvement and 30% expect conditions to remain unchanged. Even more troubling for the administration, 52% of adults believe Trump’s policies have made the economy worse.
Expert Projections
But what do the experts say? At the University of Virginia’s Darden School of Business Economic Outlook forum, 55% of attendees predicted a “soft landing” for the U.S. economy over the next 12-18 months, while 32% expected a “no landing” scenario with GDP growth at or above long-term trends. Just 14% anticipated a recession. That said, caution prevailed regarding market valuations, with 70% of respondents believing the stock market is currently in an AI bubble.
Private-sector forecasters have maintained a relatively positive outlook. The median forecast for fourth-quarter 2025 GDP growth stood at 2.2% annualized — up from earlier projections of 2.0%, according to the Wall Street Journal’s quarterly survey published in January.
JP Morgan’s analysts strike a more optimistic tone than most regarding the labor market, projecting unemployment to peak at 4.5% in the first quarter before drifting down to 4.2% by year-end. “We are more optimistic versus the street around our expectations for the health of the labor market this year,” the bank stated in a recent podcast.
Can Americans’ economic expectations be trusted as predictors? History suggests a complicated answer. Consumer sentiment often serves as a trailing indicator rather than a leading one, reflecting recent experiences rather than accurately forecasting future conditions. The stark partisan divide in economic outlook further complicates matters, suggesting many respondents may be filtering economic realities through political lenses.
As 2026 unfolds, the divergence between Americans’ optimism about growth and pessimism about inflation and jobs presents a paradox that economists, policymakers, and political strategists will be watching closely — especially with memories of 2025’s market volatility still fresh in the public consciousness.
