U.S. Consumer Sentiment Fell Again in December -- Update

By Ben Leubsdorf Features Dow Jones Newswires

A key measure of U.S. consumer sentiment slid in December for the second straight month, but continued to signal solid household confidence during the holiday shopping season

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The University of Michigan on Friday said its consumer-sentiment index was 96.8 in early December, down from 98.5 in November and its October level of 100.7, which had been the highest since January 2004.

Economists surveyed by The Wall Street Journal had expected a preliminary December reading of 99.9. A final figure for the month will be released Dec. 22.

The details of Friday's report were mixed. The index tracking current economic conditions rose to 115.9 in December from 113.5 in November. The index tracking expectations about the future was down to 84.6 from November's 88.9.

"Importantly, the largest decline in long-term economic prospects was recorded among Democrats, which reflected their concerns about the impact of the proposed changes in taxes," said Richard Curtin, the survey's chief economist.

Optimism among U.S. households has been bolstered this year by low unemployment, healthy economic growth and record-breaking gains for the stock market. A separate measure of consumer confidence produced by the Conference Board jumped in November to its highest level in 17 years.

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Friday's report also showed household expectations about future inflation firmed this month.

In December, consumers said they expected 2.5% annual inflation in five to 10 years, ticking up from 2.4% in November. The expectation for inflation over the next year was up to 2.8% from last month's 2.5%.

"We wouldn't read too much into the rise in households' 12-month ahead inflation expectations to a 20-month high of 2.8%, as it probably reflects the rise in gasoline prices, although the [Federal Reserve] can take some comfort from the tick-up in longer term inflation expectations from 2.4% to 2.5%," said Andrew Hunter, U.S. economist at Capital Economics, in a note to clients.

"Nevertheless," he added, "that will provide a bit more cover for the Fed to hike interest rates next week."

Write to Ben Leubsdorf at ben.leubsdorf@wsj.com

(END) Dow Jones Newswires

December 08, 2017 11:12 ET (16:12 GMT)