Increase in Michigan Consumer Confidence as Inflation Expectations Decline

• Michigan Consumer Sentiment increased from 61.3 in November to 69.4 in December.
• Current Economic Conditions rose from 68.3 to 74.0.
• The Index of Consumer Expectations saw an improvement from 56.8 to 66.4.

On December 9, the University of Michigan published the Michigan Consumer Sentiment report for December. The report revealed that Michigan Consumer Sentiment rose from 61.3 in November to 69.4 in December, surpassing the analyst consensus of 62.

Current Economic Conditions saw an improvement from 68.3 in November to 74.0 in December, while the Index of Consumer Expectations increased from 56.8 to 66.4.

The University of Michigan stated, "Consumer sentiment surged by 13% in December, offsetting all declines from the past four months, mainly due to improvements in expected inflation trends."

As indicated in the report, year-ahead inflation expectations decreased from 4.5% in November to 3.1% in December. The report also highlighted an increasing number of consumers anticipating favorable economic outcomes from next year's elections.

After the release of the report, the U.S. Dollar Index settled near the 104.00 level. The decline in inflation expectations may lead to a more dovish Fed, although rising consumer sentiment generally supports the U.S. dollar.

Gold continues to be under pressure as traders focus on a stronger dollar and increasing Treasury yields. Currently, gold is attempting to test the psychologically significant $2000 level.

The S&P 500 moved towards the key 4600 level as traders reacted to the Michigan Consumer Sentiment report. Today’s economic reports demonstrated that the economy remained in decent shape despite concerns about a recession, which is positive for stocks.