U.S. Consumer Sentiment Falls More Than Estimated on OutlookBy
U.S. consumer sentiment fell by more than forecast in December on declining confidence among lower-income Americans, as a gauge of the outlook tumbled to a five-month low, a University of Michigan survey showed Friday.
Highlights of Michigan Sentiment (December, Final)
The decline in the index may mar the picture of an economy that’s otherwise turning in a solid performance during the holiday season. Data released earlier on Friday showed consumer spending rose more than forecast in November and incomes advanced at a steady pace.
Even with the drop, the Michigan index remains elevated by historical standards, and the full-year average for 2017 was the highest since 2000. Respondents’ assessments of their current finances were also the most favorable in 17 years. That will help underpin consumer spending, the biggest part of the economy.
At the same time, Americans increasingly expect an economic downturn in the next five years: 49 percent in December, up from 44 percent in November and 39 percent last year. The latest drop in the Michigan index is also in line with recent declines in the weekly Bloomberg Consumer Comfort Index and a related gauge of economic expectations.
Sentiment remains sharply divided among partisan lines: About three-fourths of Republicans expect a stronger economy in the long term, while the same share of Democrats sees a downturn, according to the report. Party affiliation was also correlated with respondents’ assessments of the tax legislation awaiting President Donald Trump’s signature.
“The extent of the decline was minor, with the December figure just below the average for 2017,” Richard Curtin, director of the University of Michigan consumer survey, said in a statement. “Overall, the data indicate that real personal consumption expenditures will expand by 2.6 percent in 2018.”
- Improved financial prospects for year ahead seen by 40 percent of consumers, equal to average 2017 reading
- Consumers saw inflation rate in the next year at 2.7 percent after 2.5 percent the prior month
- Inflation rate over next five to 10 years seen at 2.4 percent, unchanged from November
— With assistance by Chris Middleton