America is running a pessimism surplus. According to the latest Morning Consult poll (released April 24), a stunning 72% of Americans think the country is on the wrong track. Maybe I’m too jacked up on espresso, but I find this gloominess unwarranted.

Below, I explain why you should defy the Debbie Downers and start looking ahead to the new bull market that’s in the making.

The stock market has been rallying so far in 2023, with large-cap growth stocks in the lead. The S&P 500 index, and the New York Stock Exchange advance/decline line, both hover well above their 200-day moving averages.

The CBOE Volatility Index (VIX), aka the “fear index,” has been falling and currently sits below 16 (a reading below 20 indicates a lower-risk environment).

Inflation, although still elevated, has significantly cooled in what appears to be a sustainable deflationary trend.

The national unemployment rate has fallen to 3.5%, the lowest since 1969, back when half a million youngsters converged on Yasgur’s farm (see chart).

To be sure, economic growth is slowing. The U.S. Commerce Department reported Thursday that during the first quarter of 2023, gross domestic product (GDP) rose by 1.1% annualized, falling short of the consensus estimate of 2%. In the fourth quarter, that percentage was 2.6%.

But if you look under the hood of the latest GDP report, there are glimmers of hope. The slowdown in GDP growth was partly driven by a big decline in inventories, while consumer spending, which is the primary engine of the U.S. economy, grew at a robust 3.7% pace. A still-vibrant labor market and healthy consumer finances are likely to prevent a sharp recession.

Also keep in mind, the Federal Reserve is purposely trying to dampen the economy to vanquish inflation. This strategy has been succeeding, which means the central bank is nearing the end of its interest rate tightening cycle. History shows that when the Fed stops tightening, stocks soar.

WATCH THIS VIDEO: Never Bet Against America

Admittedly, corporate earnings growth has decelerated. For all of calendar year 2023, analysts predict earnings growth of only 0.8%, according to FactSet. But this week, we’ve gotten a slew of better-than-expected results from tech giants, which bodes well for future economic growth.

And yes, the regional banking crisis has not completely disappeared. Notably, First Republic Bank (NYSE: FRC) is in dire straits and could be heading toward government receivership. But small banks as a whole have stopped bleeding cash and the big banks are in rock-solid shape. Indeed, the largest U.S.-based banks, which are bellwethers for the overall economy, hit Q1 earnings out of the park.

Dystopia, 24-7…

We face headwinds, of course. We always do. But I’ve hardly described an American hellscape. So why the deep pessimism among nearly three-quarters of the public?

The news media deserve much of the blame, for relentlessly emphasizing negativity. Partisan cable networks, in particular, are prone to fearmongering. TV producers rely on algorithms to guide them in delivering the kind of news that their niche audience wants. The motivation of cable news isn’t to inform citizens; it’s to entertain consumers. Fear keeps people glued to their sets.

Wall Street seems to know this. The main U.S. stock market indices soared on Thursday, in response to robust operating results and positive guidance from Big Tech stalwarts.

The quarterly numbers were strong from Alphabet (NSDQ: GOOGL), Amazon (NSDQ: AMZN), Meta Platforms (NSDQ: META), Microsoft (NSDQ: MSFT), and Texas Instruments (NSDQ: TXN).

The main equity indices extended their rally into Friday and closed higher again, as follows:

• DJIA: +0.80%
• S&P 500: +0.83%
• NASDAQ: +0.69%
• Russell 2000: +1.01%

In April, U.S. stocks racked up their best month since January. A major impetus for the upward trajectory on Friday (the last trading day of the month) was the Commerce Department’s release of the personal consumption expenditures (PCE) price index, which confirmed inflation’s decline. On a yearly basis, the PCE declined to 4.2% from 5.1% in the previous month. That’s the lowest level since May 2021.

The upshot: Dare to be bullish. According to FactSet, industry analysts in aggregate predict the S&P 500 will see a price increase of 17.0% over the next 12 months.

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John Persinos is the editorial director of Investing Daily.

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