The S&P 500 scaled a new all-time high on Friday amid signs that the economic despondency that has gripped US consumers may be easing. The index climbed 1.2% to 4,838 on Friday afternoon, clearing a record last set two years ago. It has rallied more than 17% since late October. Earlier in the day, an influential survey showed that consumer sentiment soared 13% in January to reach its highest level since July 2021. The University of Michigan’s monthly consumer sentiment index rose 9.1 points to 78.8, the biggest monthly advance since 2005 and far exceeding expectations. The news came after a similarly sharp rise in December. Joanne Hsu, University of Michigan’s director of surveys, said that over the last two months, sentiment has climbed a cumulative 29%, the largest two-month increase since 1991 as a recession ended. “Consumer views were supported by confidence that inflation has turned a corner and strengthening income expectations,” said Hsu. The rise was driven in large part by expectations that the rate of inflation will continue to decline. The survey found that consumers expect prices to climb at an annual rate of 2.9% over the next year, down from the 3.1% reported in December. Expectations about price rises over the next five to 10 years hit a four-month low of 2.8%. Consumers have consistently reported feeling gloomy about the economy since the end of the pandemic. Those reports have come even as unemployment hovers close to a 50-year low, stock markets have soared and the wider economy has remained resilient. The disconnect has puzzled economists and presented the Biden administration with a major dilemma ahead of the 2024 election. Joe Biden has made “Bidenomics” – his economic recovery program – a central plank of his re-election campaign. But surveys show it has so far met with little enthusiasm from voters. Jared Bernstein, chair of the White House council of economic advisers, hailed the survey as proof that Biden’s policies are working. “We have more work to do, but we’re on the right path as we execute President Biden’s agenda, and people are starting to feel it,” Bernstein said. “That’s a sharp contrast with congressional Republicans’ plans to cut taxes for the wealthy and big corporations while raising healthcare and prescription drug costs for hard-working American families.” The Michigan survey is the latest in a series that indicate the national mood may be changing. A survey from the Federal Reserve Bank of New York released earlier this month found consumers expected inflation to ease over the short, medium and long term and expectations about credit access and households’ financial situation were less pessimistic. In December the Conference Board reported 2023 had ended with a surge in consumer confidence. The research group’s closely watched consumer confidence survey rose to levels last seen in July.