Consumer Sentiment Soars
U.S. consumers suddenly feel better about inflation expectations, business conditions, and more, according to a preliminary December reading of the University of Michigan consumer sentiment index. The index rose 8.1 points to a four-month high of 69.4. Surveys of Consumers director Joanne Hsu explain some of the changes.
Dec. 8: Consumer sentiment soared 13% in December, erasing all declines from the previous four months, primarily on the basis of improvements in the expected trajectory of inflation. Sentiment is now about 39% above the all-time low measured in June of 2022 but still well below prepandemic levels.
All five index components rose this month, led by surges of over 24% for both the short- and long-run outlook for business conditions. There was a broad consensus of improved sentiment across age, income, education, geography, and political identification.
A growing share of consumers—about 14%—spontaneously mentioned the potential impact of next year’s elections. Sentiment for these consumers appears to incorporate expectations that the elections will likely yield results favorable to the economy.
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