U.S. Consumer Confidence Leaps as Inflation Expectations Dip - University of Michigan
By Ed Frankl
Sentiment among U.S. consumers jumped in December, a little higher than in initial estimates, amid stronger expectations for cooling inflation in 2024.
The final reading of the consumer sentiment index rose to 69.7 in December from 61.3 in November, according to data from a survey carried out by the University of Michigan released Friday.
Economists polled by The Wall Street Journal had expected the indicator to be at 69.4, the same as the preliminary estimate made in mid-December.
The reading reversed all declines from the previous four months, driven by improvements in how consumers view the direction of inflation, according to survey director Joanne Hsu.
Consumers' expectations for inflation fell to 3.1% in December from 4.5% last month--the lowest since March 2021--the data said. Slowing inflation prompted Federal Reserve Chair Jerome Powell to pivot from talking up monetary tightening toward considering when to cut interest rates at the central bank's meeting last week.
Driven by more hopeful expectations for business conditions, all five index components of the University of Michigan indicator rose this month, something which has only occurred in 10% of readings since 1978, Hsu said.
"The index is now just shy of the midpoint between the prepandemic reading and the historic low reached in June 2022," she added.
All age, income, education, geographic, and political identification groups saw gains in sentiment this month, according to the survey.
Write to Ed Frankl at edward.frankl@wsj.com
(END) Dow Jones Newswires
December 22, 2023 10:35 ET (15:35 GMT)
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