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©BloombergUS consumers were the most confident in December in more than half a year, as signs of easing price pressures in the economy helped push inflation expectations to their lowest levels since last fall.
The US consumer confidence index came in at 108.3 in December, from an upwardly revised reading of 101.4 in November, the Conference Board reported on Tuesday, beating economists’ expectations of 101. A reading of 100 refers to the 1985 level.
December marks the index’s highest level since April and follows two consecutive months of falling confidence.
The improvement came because consumers had “more favorable opinions about the economy and about jobs,” said Lynn Franco, the Conference Board’s senior director of economic indicators.
Of particular note in the report is that consumer inflation expectations have fallen to their lowest levels since September 2021, “with the recent fall in gas prices being a key driver,” Franco said.
Consumer confidence data helped boost stocks on Wednesday, with the S&P 500 rallying after the report was released, and up 1.7 percent in morning trade.
Consumers made more vacation plans, but intentions to buy homes and expensive appliances continued to cool.
“This shift in consumer preference from expensive items to services will continue in 2023, as will headwinds from inflation and interest rate hikes,” Franco said.
The index’s two constituent metrics, the Current Situation Index and the Expectations Index, both improved in December. The former, which tracks consumer perceptions of the current business and work environment, rose 8.9 points to 147.2, while the latter, which assesses consumers’ near-term prospects for income, business and conditions, rose 5.7 points to 82.4 points increased.
“However, expectations still remain around 80 — a level associated with a recession,” the Conference Board said.
