By Xavier Fontdegloria
Confidence among U.S. consumers improved in December, recovering the losses registered in November, as concerns over inflation and the state of the economy eased at year-end.
The University of Michigan said Friday that its consumer sentiment index rose to 59.7 in December from 56.8 in November, slightly up from the 59.1 preliminary mid-month reading.
Economists polled by The Wall Street Journal expected the index to come in at 59.1, unchanged from the preliminary data.
Despite December's gain, sentiment among American consumers remains very subdued as high inflation throughout the year has weighed on moods. The University of Michigan sentiment index closed 2021 at 70.6, and was as high as 101.0 in February 2020, before the Covid-19 pandemic hit.
Moderating price growth supported December's rise in confidence, said Joanne Hsu, the survey's director. "Sentiment remains relatively downbeat at 15% below a year ago, but consumers' extremely negative attitudes have softened this month on the basis of easing pressures from inflation," she said.
Consumer prices rose 7.1% in November compared with the same month a year earlier, easing from a 7.7% increase in October and marking the lowest inflation rate since December 2021.
Consumer inflation expectations declined in December, according to the survey. For the next year, Americans expect prices to rise 4.4%, less than the 4.9% anticipated in November. Inflation expectations for the next five years--a closely watched indicator for Federal Reserve officials--fell to 2.9% from 3%.
Views on business conditions for the next year improved sharply in December, while consumers also were more optimistic over the long-term outlook, Ms. Hsu said. Assessments of personal finances were unchanged, she said.
The index measuring current economic conditions rose to 59.4 in December from 58.8 in November, but fell slightly from the preliminary early-month reading of 60.2.
The index of consumer expectations--which reflects the balance of respondents anticipating improved business conditions in the next six months--increased to 59.9 from 55.6 in November, up from its preliminary reading of 58.4.
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(END) Dow Jones Newswires