December Consumer Sentiment

Consumers were not as ebullient in December as in November according to the University of Michigan’s Consumer Sentiment Survey.  The reading fell to 72.9 from 82.7.  Consumers reported being more concerned about their current situation, but their expectations of the future did the most damage to the indicator, falling from 77.6 to 63.8.

Personal finance expectations fell to a level not seen in a year.  Only 25 percent of the households surveyed anticipate financial gains, and very few expect an increase in income.  Despite a low inflation outlook, consumers are concerned their incomes will not keep up with the modest price increases they are expecting.

The outlook for jobs deteriorated lately also.  As recently as October, only 19 percent of households expected higher unemployment.  In December, that figure jumped to 35 percent, the highest count since the summer of 2011 during Congress’ debt ceiling face-off.

Consumers expressed worry about the fiscal cliff facing the nation at the first of the year.  Of course, the beltway managed to cobble together a last minute agreement after this survey was taken.  It will be interesting to see how the deal impacts the attitudes of consumers when the details of the next survey are revealed.    (by C. Cox)