University of Michigan Consumer Sentiment Holds at 74.0, Highest Since April

Dec 20, 2024, 03:01 PM

The University of Michigan's final consumer sentiment index for December 2024 remained steady at 74.0, matching both the preliminary estimate and the previous month's reading. The index, which measures consumer confidence, saw its current economic conditions component rise to 75.1 from 77.7, while the consumer expectations index increased to 73.3 from 71.6. Inflation expectations for the next year edged down to 2.8% from an estimated 2.9%, and long-term inflation expectations over the next five to ten years also decreased to 3.0% from an estimated 3.1%. This marks the fifth consecutive month of rising consumer sentiment, reaching its highest level since April 2024, driven by improved perceptions of the economy as inflation has slowed. Buying conditions exhibited a strong improvement, primarily due to consumers expecting future price increases for large purchases. The expectations index showed a post-election re-calibration, with sentiment rising for Republicans and falling for Democrats, while remaining unchanged for Independents. Overall, consumer sentiment is currently about midway between the all-time low reached in June 2022 and pre-pandemic readings.