The final survey released by the University of Michigan on Friday (23rd) showed that the consumer confidence index rose to 59.7 in December, slightly higher than the initial value of 59.1 and the previous month’s 56.8. It is worth noting that consumers’ inflation expectations for the next year fell to 4.4% from the previous value of 4.9%, the lowest since June 2021.
According to the University of Michigan survey, the final value of the December consumer confidence index rose to 59.7, which was higher than the 59.1 expected by economists. In addition, the five-year inflation expectation dropped from the initial value of 3% to 2.9%. The proportion of consumers whose living standards are affected by inflation fell slightly in December, but remained above 40 percent for the seventh straight month, the survey said.
Separately, the current conditions index, which measures current conditions, fell slightly to 59.4 from 60.2 previously, though still above November’s level, while the expectations index, which measures future conditions, rose to 59.9 from an initial reading of 58.4.
Joanne Hsu, director of the University of Michigan Consumer Confidence Survey, said consumers may agree that inflation has slowed compared to the level of the past few months, but there is considerable uncertainty regarding the magnitude and speed of inflation’s decline. In addition, household purchases of durable goods were stable in the final report compared with the initial survey, with consumers noting the negative impact of higher interest rates on purchases of automobiles and housing.
As for employment, the University of Michigan survey shows that people’s concerns regarding unemployment are increasing. About 45% of consumers predict that the unemployment rate will rise in the next year, which is the largest percentage since April 2020.
Recent consumer price data suggests that while U.S. inflation remains elevated, the worst may be over. U.S. gasoline prices, for example, have fallen steadily since early November, giving consumers some breathing room amid prevailing price pressures.
Still, the road to the Federal Reserve’s (Fed) 2% inflation target might be long and painful, with many observers forecasting a U.S. recession next year, with fresh data on Friday showing the Fed’s preferred inflation Indicators of inflation slowed last month, while consumer spending stagnated.