U.S. consumer sentiment jumps in December as inflation fears recede: U. of Mich.

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The numbers: The University of Michigan’s gauge of consumer sentiment rose to a preliminary December reading of 59.1 from a November reading of 56.8.

Economists polled by the Wall Street Journal had expected a December reading of 56.5.

Inflation expectations over the next year fell to 4.6% from 4.9% last month. It is the lowest since September 2021. Five-year inflation expectations remained steady at 3%.

Key details: A gauge of consumer’s views of current conditions rose to 60.2 in December from 58.8 in November, while an indicator of expectations for the next six months rose to 58.4 from 55.6 last month.

Big picture: Economists think falling gasoline prices are behind the improvement in confidence.

The national average retail price for a gallon of gas is now $3.33, down $1.69 from June, according to White House data.

Still, high inflation has consumers remain in a relatively dour mood. The index is only marginally above the record low of 50 in June. By comparison, the consumer sentiment index was 101 in February of 2020.

Looking ahead: “High prices coupled with ongoing aggressive rate hikes will be a headwind for consumers and sentiment going forward,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.

Market reaction: Stocks DJIA, -0.90%   SPX, -0.73% were higher on Friday on the back of hotter-than-expected wholesale inflation in November. The yield on the 10-year Treasury note TMUBMUSD10Y, 3.583% rose to 3.54%.

This article was originally published by Marketwatch.com. Read the original article here.

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