Consumer Sentiment in U.S. Rose in December From a Decade Low

(Bloomberg) -- U.S. consumer sentiment rose in early December by more than forecast on an improved economic outlook, though inflation concerns continue to weigh on households.

The University of Michigan’s preliminary sentiment index increased to 70.4 from a decade-low 67.4 in November, data released Friday showed. The figure exceeded the median estimate of 68 in a Bloomberg survey of economists.

The sentiment data follow a government report released earlier Friday showing the cost of goods and services rose 6.8% in November from a year earlier, the fastest annual pace since 1982.

Consumers expect inflation to rise 4.9% over the next year, matching last month’s reading, which was the highest since 2008, the Michigan report showed. They expect prices will rise at an annual rate of 3% over the next five to 10 years, also unchanged from November.

“Consumers continued to voice a considerable degree of uncertainty about future inflation rates, mostly about near- rather than long-term inflation rates,” Richard Curtin, director of the survey, said in a statement.

Consumer spending, fueled by solid wage growth and savings accrued during lockdowns, has held firm so far in the holiday season.

Still, rising costs come as uncertainties over the new omicron variant of the coronavirus cloud Americans’ return-to-office and travel plans heading into the new year.

The gauge of current conditions rose to 74.6, while a measure of future expectations increased to 67.8, according to the survey.

The report meantime continued to show a sharp divide along partisan lines. Sentiment among Democrats rose 3.5 points to 91.9. That compares to a reading of 46.7 among Republican respondents, up from last month’s record low.

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