The final December reading for the University of Michigan Consumer Sentiment Index was revised up to 98.3 (previously 97.5) as consumers reported even higher confidence in current conditions at 116.1 (previously 115.2) and more optimism about the six month outlook at 87.0 (previously 86.1). Consumers shrugged off falling stock prices and focused on the strong labor market and prospects for further increases in income. Recent steep declines in gasoline prices probably helped as well as consumers gained in discretionary income going into the holidays.
Inflation expectations remain tame, if a bit above recent years. The one-year expectation was at 2.7% at the low end of the range of 2.7%-2.9% that has marked 2018 as a whole. The five-year expectation as at 2.5% which is just above the low end of the 2.4%-2.6% range for 2018.
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