Much has been made about how Americans feel bad about the state of the economy, even though according to many broad-based statistical measures things are pretty good.
It looks like that message has sunk in to some extent, as a widely followed reading of consumer opinion jumped in December and ended a four-month streak of declines.
The University of Michigan said Friday that its consumer sentiment index jumped 13% to 69.4, as people became less worried about inflation and more optimistic about a number of issues. That not only ended the downturn but reversed the decline, returning the sentiment index to where it was in August.
Quincy Krosby, chief global strategist for LPL Financial, wrote that the reading shows “a more optimistic view of economic conditions, which suggests that coupled with a stronger than expected payroll report, helps underpin the narrative of a still resilient economy.”
The report was a surprise to experts as well. Economists surveyed by Dow Jones Newswires and The Wall Street Journal thought sentiment would inch higher to 62.4 from November’s reading of 61.3, but the metric jumped instead.
“There was a broad consensus of improved sentiment across age, income, education, geography, and political identification,” said Surveys of Consumers Director Joanne Hsu. Year-ahead inflation expectations plunged from 4.5% last month to 3.1% this month. The current reading is the lowest since March 2021.”
Consumers generally haven’t felt great about the economy. They’ve been concerned about the possibility of a recession, which experts discussed a great deal in 2022 and 2023 even as the economy held up, and they’re feeling the continued effects of the inflation of the last few years along with other factors like rising credit card debt and the high cost of housing.
Inflation has been slowing for months and the job market