By Joshua Kirby
Sentiment among U.S. consumers leapt in mid-December, reversing months of declining confidence as easing inflation leaves Americans feeling brighter about the economic future.
A preliminary reading Friday of the University of Michigan's consumer-confidence index show it surging to 69.4 points from 61.3 at the end of November. Economists polled by The Wall Street Journal had expected it to rise less sharply to 62.4.
The jump reverses four previous months of declines, though confidence remains well below levels before the Covid-19 pandemic, survey director Joanne Hsu said. Consumers are confident that inflation will fall more rapidly than previously expected, seeing it at 3.1% for the year ahead compared with 4.5% previously, the survey showed.
All five index components rose at the start of December, led by sentiment around business conditions both for the short and long terms. A growing share of respondents, around 14%, pointed to next year's presidential elections as brightening their mood.
"Sentiment for these consumers appears to incorporate expectations that the elections will likely yield results favorable to the economy," Hsu said.
Inflation has eased considerably this year amid tight monetary policy, standing at 3.2% in October. With signs that policy is squeezing the economy, the Federal Reserve has hinted it has come to the end of its hiking cycle. Economists expected the Fed to keep its key rate in place at its meeting next week, though few expect it to signal rate cuts any time soon.
Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby
(END) Dow Jones Newswires
12-08-23 1035ET
