Michigan Consumer Sentiment Jumps As Inflation Expectations Fall

Key Insights

• Michigan Consumer Sentiment grew from 61.3 in November to 69.4 in December. 
• Current Economic Conditions increased from 68.3 to 74.0.
• Index of Consumer Expectations improved from 56.8 to 66.4.

On December 9, the University of Michigan released Michigan Consumer Sentiment report for December. The report indicated that Michigan Consumer Sentiment increased from 61.3 in November to 69.4 in December, compared to analyst consensus of 62.

Current Economic Conditions improved from 68.3 in November to 74.0 in December, while Index of Consumer Expectations grew from 56.8 to 66.4.

The University of Michigan commented: “Consumer sentiment soared 13% in December, erasing all declines from the previous four months, primarily on the basis of improvements in the expected trajectory of inflation.”

According to the report, year-ahead inflation expectations declined from 4.5% in November to 3.1% in December. The report also noted that a growing share of consumers expected that next year’s elections will yield results favorable to the economy.

U.S. Dollar Index settled near the 104.00 level after the release of the better-than-expected report. Falling inflation expectations may lead to a more dovish Fed, although rising consumer sentiment is typically bullish for the U.S. dollar.

Gold remains under pressure as traders focus on stronger dollar and rising Treasury yields. Currently, gold is trying to get to the test of the psychologically important $2000 level.

SP500 moved towards the key 4600 level as traders reacted to the Michigan Consumer Sentiment report. Today’s economic reports showed that the economy remained in a decent shape despite recession worries, which is bullish for stocks.

For a look at all of today’s economic events, check out our economic calendar.