US Inflation Outlook Drops, Consumer Confidence Soars in December
US economic dynamics see a shift as year-ahead inflation expectations decline sharply, contrasting with a robust 13% surge in consumer sentiment for December, according to a recent University of Michigan survey.
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Year-ahead inflation expectations in the US fell to 3.1% in December, a sharp decline from November's 4.5%, marking the lowest since March 2021, states a recent University of Michigan survey. Concurrently, long-run inflation expectations dipped to 2.8%, matching the second-lowest level since July 2021.
The survey also revealed a significant 13% surge in US consumer sentiment for December, erasing declines from the previous four months. The index of consumer sentiment rose by 8.1 percentage points to 69.4, surpassing market expectations of 62.0. Despite this improvement, sentiment remains below pre-pandemic levels, according to Surveys of Consumers Director Joanne Hsu.
Key contributing factors include a 5.7-point rise in the index of current economic conditions to 74.0 and a 9.6-point jump in the index of consumer expectations to 66.4. Hsu noted that about 14% of consumers mentioned the potential impact of next year's elections, with sentiment incorporating expectations favoring positive economic outcomes.
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