University of Michigan Reports Final Results of Its Consumer Sentiment Index for December

On Friday, the University of Michigan released the final results of its Surveys of Consumers for December.

• The Index of Consumer Sentiment increased to a reading of 74.0 in December, up from 71.8 in November. This is a month-over-month increase of 3.1% and up 6.2% year-over-year (69.7 in December 2023).
• Current Economic Conditions increased to a reading of 75.1 in December, up from 63.9 in November. This is a month-over-month increase of 17.5% and up 2.5% year-over-year (73.3 in December 2023).
• The Index of Consumer Expectations declined to a reading of 73.3 in December, down from 76.9 in November. This is a month-over-month decrease of 4.7% but up 8.8% year-over-year (67.4 in December 2023).

Adding additional information to the report, Surveys of Consumers Director Joanne Hsu said:

“Consumer sentiment confirmed its early month reading, rising for the fifth consecutive month and reaching its highest value since April 2024. Buying conditions exhibited a particularly strong 32% improvement, primarily due to a surge in consumers expecting future price increases for large purchases. The expectations index continued the post-election re-calibration that began last month, climbing for Republicans and declining for Democrats in December. Importantly, for Independents, expectations were essentially unchanged from the past month or so for personal finances, short-run business conditions, and long-run business conditions. Broadly speaking, consumers believe that the economy has improved considerably as inflation has slowed, but they do not feel that they are thriving; sentiment is currently about midway between the all-time low reached in June 2022 and pre-pandemic readings.

Year-ahead inflation expectations rose from 2.6% last month to 2.8% this month, the first month-over-month increase since May, but within the 2.3–3.0% range seen in the two years pre-pandemic. Long-run inflation expectations edged down from 3.2% last month to 3.0% this month, modestly elevated relative to the range of readings seen in the two years pre-pandemic.”