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University of Michigan’s preliminary consumer confidence index rises in December
Consumer confidence in the U.S. rises above expectations in December. The preliminary estimate of the University of Michigan’s consumer sentiment index came in at 99.2, as compared with consensus expectations of 97. Rises were seen in the current conditions and expectations indices. The press release states that most of the gains in December were from upper income households that saw rises in household wealth, greatly driven by the stock market rally.
Indeed, households with incomes in the top one-third of the distribution assessed their current financial condition as the third highest in the last 20 years. However, overall assessments of income and wealth were also helped by the slight fall in inflation expectations.
“In all, we view consumer sentiment as remaining on a solid footing, and supportive of consumption spending in the months ahead”, said Barclays in a research report.
Delving into details, consumers’ assessments of current conditions improved, with the index moving higher to 115.2. Most of this was driven by more positive assessments of current household finances, possibly underpinned by strong labor markets.
Meanwhile, the expectations index rose to 88.9, in the midst of a widespread rebound in assessments of business and employment conditions, and income expectations. A rebound in business expectations possibly reflects some positivity about a potential U.S.-China “phase 1” deal. In the meantime, consumers remain positive about their real income expectations.
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