The US in 2023: Economy, AI, Politics

Three major developments dominated the conversations in board rooms and living rooms in the U.S. in 2023: the economy, generative AI and an increasingly polarized political establishment.

Ipsos | Almanac 2024 | United States

Unsettling balancing act: A bumpy but soft landing for the U.S. economy?

The economy was a major, unpredictable and mixed theme in the United States in 2023. Economic indicators were mixed, leading to consumer uncertainty and pessimism. Rapidly rising inflation finally began cooling through 2023 as the Federal Reserve continued raising interest rates. Investors clung to the words of Fed Chair Jerome Powell, and the stock market’s ups and downs reflected this uncertainty.

Corporate profits were up, but consumers and their spending power, the backbone of the economy, started feeling the pain. They dipped into pandemic-fueled savings as the rising costs of rent, gas, food and other essentials hit their wallets. Credit card debt increased, and mortgage rates hit generational highs, slowing the housing market. Unemployment remained low, but the tech sector had very public layoffs that further dampened confidence and took the world’s largest economy to the brink of recession. Only 13% think the economy now is better than it was five years ago, according to Ipsos polling for Reuters.

AI's double-edged sword: Transformative breakthroughs and emerging concerns

Ipsos | Almanac 2024 | USAThe duality of AI's potential for both transformation and disruption emerged as a defining theme of the year. With OpenAI’s vastly improved ChatGPT 3.5 entering the market at the end of 2022, the entire technology conversation pivoted. The word “metaverse” disappeared from the national conversation as everyone, consumers and businesses alike, pivoted to understanding the transformational nature of generative AI. Artists collaborated with AI to create novel forms of digital art, while creative writers utilized AI to conceive unprecedented narratives and businesses embedded enterprise large language models with the potential to transform the productivity of their workforce.

However, this rapid technological advancement was not without its caveats. Concerns regarding the misuse of generative AI for disinformation campaigns and hallucinations proliferated, igniting discussions about ethical regulations. For example, 68% of consumers think AI will help with the early detection of diseases, but only 32% trust AI with their medical data – which it would need to access to learn how to detect diseases. Apprehensions about AI's potential impact on job displacement began to surface, particularly among the younger demographic.

Polarized American reality: A year marked by inflation, indictments and the re-emergence of Trump

While uncertainty is the word that best describes 2023, polarization continued to be the one American constant. Americans’ establishment-skeptic political bent framed politics as the public continued to make do with inflation and a host of other problems. America’s polarized reality continued to be a defining feature of political life. It colored everything from the release of the “Barbie” movie to extreme weather to the many potential government shutdowns and defaults to the two Speakers of the House that Congress burned through to views on the wars in Ukraine and Israel.

But perhaps nothing showcased this dynamic like the historic indictment of former president Donald Trump and his status as the frontrunner for the GOP. Even as the legal cases mounted against the former president, Republicans did not abandon their party leader, while Democrats doubled down in their aversion. Trump cemented his position in the Republican primary, now standing roughly 15 points ahead of his next challenger, according to 538/Washington Post/Ipsos polling.

The impact of inflation muted President Biden’s approval numbers and framed Americans' dissatisfaction with his job on the economy. It is the issue Americans are most worried about, but as it eased, other second-tier issues rose to importance. This diffuse issue landscape made for unpredictable politics.

Looking forward

Ipsos | Almanac 2024 | USAThe effects of inflation seem to be settling in, and 46% of Americans say they don’t expect their household spending to change in the coming months, up from 38% the year before. And there is optimism the U.S. economy may have navigated a very challenging soft landing, bringing down inflation without the extra pain of causing a recession in the process. But the pain of inflation will linger: People tend to feel economic losses more strongly than gains, and prices that rose during 2022 and 2023 are likely to remain high in 2024. Because wages haven’t kept up with inflation for many Americans, resentment may continue to fester. This will put further stress on brands to deliver value in the year ahead.

Many Americans were surprised by the speed with which AI burst onto the scene and became a major factor in the working world this year, but now they’re preparing for what comes next. When workers were asked if AI would change their jobs in the next five years: 46% overall and 62% of younger workers think it’s likely. Strikingly, 46% of younger workers think their jobs will be outright replaced or displaced by AI. The only thing certain about what comes next in AI is that it will surprise most of us, and brands and policymakers will need to stay on their toes.

As for politics: Americans will face another unprecedented election in 2024. Voters know both Donald Trump and Joe Biden well enough at this point that strong, polarized personal perceptions of the candidates will play a stronger role than usual in determining voters’ choices. But personal politics won’t be the whole game: Issues will still continue to drive voters to the polls (or away from them). Democrats' off-year election wins in Congress in 2022 demonstrated how inflation doesn’t have to be their death knell, as other issues like abortion took center stage. Voters who care deeply about these issues above all else – and others, like war, that may pop up or escalate before November 2024 – may still be the ones who decide this election.

For a regular update on the latest polling in the US, take a look at the polling team’s Week in Review.

Nicholas Mercurio
Chief Client Officer
Ipsos in North America