Consumer Sentiment Hits Five-Month High

Best Index Reading Since The Summer

Consumer SentimentThe final Thomson Reuters/University of Michigan (TR/UM) consumer sentiment reading of 2014 shows an improving economic outlook among Americans. The latest sentiment index rose sharply to 82.5 for December, up from the 75.1 last month, the best reading since the summer.

“Most of the gain was due to more favorable buying plans due to renewed discounting as well as more favorable short-term prospects for the economy,” survey director Richard Curtin wrote in a statement. “Personal finances, the most critical factor that shapes consumer spending, did improve in late December, although largely due to rising incomes and wealth among those in the top third.”

The survey’s measure of current economic conditions increased to 98.6 in December, a 10-point jump compared to November. The TR/UM gauge of consumer expectations also rose from 66.8 last month to 72.1 in December. Finally, the one-year inflation expectation was 3%, while the survey’s five-to-10-year inflation outlook dipped from 2.9% a month ago to 2.7% today. Most survey results were in line with the forecasts of analysts.

Separately, reinforcing a brighter economic picture, figures from the Commerce Department this week showed personal spending rose 0.5% in November. After adjusting the data for inflation, purchases increased 0.5% as well, the biggest gain since early 2012.