Like weak sunlight spilling through dense cloud cover, the economic outlook of U.S. consumers brightened cautiously in December, though “the overall tenor of views is broadly somber,” according to preliminary survey results published by the University of Michigan on Friday.
The university’s index of consumer sentiment rose 2.3 points to 53.3 in December, a 4.5% gain from November but a 28% decline from last year.
The monthly index assesses evolving consumer attitudes on current and future business conditions, personal finances, job prospects, wages and inflation.
Among component indexes, consumers’ outlook on current economic conditions fell 0.8% monthly and 32.5% from last year. Consumers’ expectations for improved economic conditions rose 7.8% from November, however, to land 25% lower than last year’s levels.
November’s plummeting outlooks for personal finances — reflecting consumers’ malaise in the midst of the U.S. government shutdown — changed course in December, rising 13% over the month. The shutdown began Oct. 1 and ended Nov. 12.
“This month’s increase was concentrated primarily among younger consumers,” said Joanne Hsu, director of Surveys of Consumers at the university, in a statement released with the survey results.
Expectations for personal finances remained 12% lower than the beginning of the year, with slight improvements in labor market outlooks also remaining “relatively dismal.”
Private sector job losses in November continued a monthslong slowdown in job creation as private employers navigate elevated borrowing costs, the Trump administration’s signature tariff policies and uncertain labor demands amid advances in artificial intelligence.
Concerning inflation, respondents continued to cite the burden of high prices, noted Hsu, though year-ahead inflation expectations fell from 4.5% in November to 4.1% this month.
That marks the fourth consecutive month of declining expectations for year-ahead inflation and the lowest reading since President Donald Trump took office in January.
Shutdown-delayed government data released Friday showed the personal consumption expenditures (PCE) price index for September — initially scheduled for release by the Bureau of Economic Analysis on Oct. 31 — rose 0.3% from August and 2.8% from a year earlier.
A special report appended to the university’s December survey results examines the trended results for consumers’ reported inflation expectations over the course of 2025.
In December, median long-run inflation expectations of about 3.2% were level with January’s reading — above 2024 and pre-pandemic median readings but far below the April 2025 peak of 6.7%, which was the highest such reading since 1981.
“Expectations exhibit substantial uncertainty, though less than in mid-2025,” the special report says.
The shutdown-delayed consumer price index (CPI) for September — released during the shutdown as a one-off exception — increased 3% annually compared to 2.9% and 2.7% growth in August and July, respectively.
Together, September CPI and PCE price indexes are the last government measures of changes in consumer prices that Federal Reserve officials will digest ahead of their two-day policy meeting next week on Dec. 9 and 10.
