Consumer confidence rose in December to the highest level in five months as sentiment on both the current and future situations improved markedly.
The data from the Conference Board released on Wednesday adds to a string of economic data in recent months that supports further sustained expansion in the economy.
The increase in confidence was broad-based in December, with the overall index rising to 110.7 from 101.
While the survey found that consumers expect inflation to fall from 4.8% to 4.6% over the next 12 months, employment sentiment—which measures the difference between jobs that are plentiful and jobs that are hard to get—also picked up, rising to 27.5 from 23.
Spending plans showed overall increases for all categories, according to survey respondents. The data also pointed to more vacation spending than previously recorded.
Clearly, with the help of falling inflation, declining gasoline prices and a continuing strong jobs market, there should not be a lot of issues that weigh on consumers.
Read more of RSM’s insights on the economy and the middle market.
Even when confidence was at a multiyear low in recent months, the economy continued to add thousands of new jobs while spending staying robust.
It is hard to believe that the economy will fall into a downturn as confidence picks up and inflation approaches the Federal Reserve’s 2% target.
We remain comfortable with our base case forecast of a soft landing next year. In the meantime, we can expect another strong month of job gains when the employment report for December is released in two weeks.
