The final University of Michigan Consumer Sentiment Index for December rose month over month from a final November reading of 97.5 to 98.3. When the preliminary December index score was reported earlier this month, the index was flat with the prior month’s final score.
The final reading is 0.8% higher than the final November index reading and 2.5% higher than the final December 2017 index score of 95.9.
Economists polled by Bloomberg were expecting a December reading of 97.5.
The December subindex readings were mostly higher compared both to November and to last December.
The consumer expectations subindex fell 1.2% month over month to 87, and the current conditions subindex rose 3.4% from 112.3 to 116.1.
Year over year, the current conditions subindex is up 2% and the consumer expectations subindex is up 3.2%.
The survey’s chief economist, Richard Curtin, said:
Consumer confidence remained in December at the same record favorable levels as it has throughout the year. The Sentiment Index averaged 98.4 in 2018, the best year since 107.6 in 2000. 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.