US Consumer Sentiment Revised Higher

The University of Michigan's consumer sentiment for the US was revised higher to 98.3 in December of 2018 from a preliminary of 97.5 and 97.5 in November, final estimates showed. The Sentiment Index averaged 98.4 in 2018, the best year since 107.6 in 2000.

The current economic conditions subindex increased to 116.1 from a preliminary of 115.2 and 112.3 in November. The gauge for consumer expectations went up to 87 from a preliminary of 86.1 but fell from 88.1 in November. Inflation expectations for the year ahead eased to 2.7 percent from 2.8 percent, the same as in the preliminary estimates and the 5-year outlook fell to 2.5 percent (2.4 percent in the flash estimate) from 2.6 percent. 

Over the past half century, sentiment was higher in only two other time periods: 1964-65 and 1997-2000. These periods correspond to the two longest prior expansions since the mid 1800's. If the current expansion lasts past mid-2019, as is likely based on current data, it will become the longest expansion ever recorded. 

While the plunge in stock prices has recently garnered the most attention in the national press, consumers have focused more on their concerns about income and job prospects. Consumers reported more negative than positive news about job prospects for the first time in two years, with the shift widespread across socioeconomic subgroups. When asked about prospects for the national unemployment rate, 30% expected increases, up from last month's 22% and the highest percentage in two years. Importantly, this still meant that 70% anticipated no increase in unemployment in the year ahead. Surprisingly, even in the last week of the survey, falling stock prices were reported by just 12% as a primary concern about recent economic developments. This may reflect their initial dismissal as another indication of the heightened volatility of stock prices, and not signal an emerging downtrend. While next month's data may reflect increased concerns, it has been news of changing job and income prospects that have been of the greatest concern to consumers. 

US Consumer Sentiment Revised Higher

University of Michigan | Joana Taborda |
12/21/2018 3:10:49 PM