The end of each year is usually a time for reflection about how the economy and markets fared, as well as for assessing future prospects. Normally, the assessments are a blend of both positive and negative considerations.

2023, however, was different: The U.S. economy performed better than expected by virtually every yardstick. Real GDP exceeded expectations expanding by 2.6 percent, unemployment remained low at 3.8 percent and inflation as measured by the Personal Consumption Expenditures deflator slowed to 2.8 percent according to the Federal Reserve’s latest economic projections.

Viewed from this perspective, the U.S. economy not only avoided a much-feared recession, it achieved a nearly perfect landing.

The progress in reducing inflation has enabled the Fed to keep interest rates on hold since the July Federal Open Market Committee meeting. Meanwhile, following the December Federal Open Market Committee meeting, the Fed signaled it will likely pivot policy in the coming year and lower interest rates.

The result has been a powerful rally in financial markets. Yields on 10-year Treasuries plummeted from a high of 5 percent in late October to fall below 4 percent. The Dow Jones Industrial Average soared to an all-time high above 37,000 while the S&P 500 index and the Nasdaq 100 index returned 22 percent and 42 percent, respectively, during the year.

Yet, despite this, public opinion polls indicate the vast majority of Americans believe the economy is in trouble.

A Yahoo Finance/Ipsos survey of registered........

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