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The University of Michigan’s revised consumer sentiment reading for December showed a downtick. While the report is not as broad as the Conference Board’s consumer confidence reading, the data from the university at the end of each month is considered a better barometer than what it releases earlier in the month.

The final reading for December was 95.9, down from the 96.8 preliminary figure. Dow Jones (Wall Street Journal) had expected the reading to tick up in December to 97.1.

This decline is based on sentiment readings of 98.5 in November and down from 100.7 in October. Still, October represented a high since 2004.

There was a disparity between current conditions and in expectations. The Current Economic Conditions index rose to 113.8 in December from 113.5 in November (and from 111.9 a year earlier). The Index of Consumer Expectations fell to 84.3 in December from 88.9 in November (compared with 89.5 a year earlier).

It turns out that the drop in confidence was not unilateral. And it also was still handily above normal. The report said:

Consumer confidence continued to slowly sink in December, with most of the decline among lower income households. The extent of the decline was minor, with the December figure just below the average for 2017 (95.9 versus 96.8). Indeed, the average in 2017 was the highest since 2000, and only during the long expansions of the 1960’s and 1990’s was confidence significantly higher. The recent strength was due to the second highest assessments of current economic conditions since 2000. This strength was offset by a slight increase in uncertainty about future economic prospects. Tax reform was spontaneously mentioned by 29% of all respondents, with nearly an equal split between positive and negative impacts on economic prospects.

Much of the confidence and sentiment remains dividend based on people’s political preferences and views on taxes. The report also suggests that consumer spending is going to rise in the year ahead. It said:

Party affiliation was the dominant correlate of people’s assessments of the tax legislation, with the long term economic outlook the most negatively affected. Buying plans for durables and vehicles remained unchanged at favorable levels. Most consumers will know more about the revised tax code when the new paycheck withholding amounts take effect in early 2018. While the mostly small gains in take-home pay may not spark an uptick in optimism, those gains would act to dampen any renewed pessimism. Overall, the data indicate that real personal consumption expenditures will expand by 2.6% in 2018.
While the consumer sentiment reading impacts the markets, this is a revision number and revisions tend to be less impacting than initial estimates.

The Dow was down eight points and the S&P 500 was down just a point Friday morning. It’s hard to expect much movement out of the markets on a day before a major holiday, particularly after the Federal Reserve already raised interest rates earlier this month. And the year has been incredibly strong too — the Dow is up 25% and the S&P 500 is up just a tad under 20%, if you include dividends.