Consumer sentiment increased 2.3 points month-over-month in December to 53.3, down 20.7 points from one year ago, according to preliminary results of the University of Michigan Surveys of Consumers. The Current Economic Conditions Index edged down 0.4 points from the previous month to 50.7 and down 24.4 points from the previous year. The Consumer Expectations Index increased 4.0 points to 55, 18.3 points lower than the December 2024 Index.
Consumer sentiment lifted 2.3 index points in early December, within the margin of error. This month’s increase was concentrated primarily among younger consumers. Overall, while views of current conditions were little changed, expectations improved, led by a 13% rise in expected personal finances, with improvements visible across age, income, education, and political affiliation. Still, December’s reading on expected personal finances is nearly 12% below the beginning of the year. Similarly, labor market expectations improved a touch but remained relatively dismal. Consumers see modest improvements from November on a few dimensions, but the overall tenor of views is broadly somber, as consumers continue to cite the burden of high prices.
Looking to the future, year-ahead inflation expectations decreased from 4.5% last month to 4.1% this month, the lowest reading since January 2025. This marks four consecutive months of declines, but short-run inflation expectations are still above the 3.3% seen in January. Long-run inflation expectations softened from 3.4% last month to 3.2% in December, matching the January 2025 reading. In comparison, 2024 readings ranged between 2.8 and 3.2%, while the readings in 2019 and 2020 were below 2.8%. Inflation uncertainty over both time horizons—as measured by the interquartile range of responses—remains higher than January of this year.
Read the University of Michigan Surveys of Consumers release.
