According to the University of Michigan’s consumer sentiment survey, Americans expect inflation to ease as we head into 2023 in the wake of lowering prices at the pump and despite uncertainty regarding the war in Ukraine. The index, which measures Americans’ general assessment of current economic conditions, rose to 60.2 in December, up from 58.8 in November. This beat the forecasted consensus of economists, which had the gauge remaining stagnant at 58.8. This is welcome news for the Fed as they have managed to keep the window open for a “soft landing” despite many on Wall Street scoffing at the idea just a few months prior.
Americans see prices rising 4.6% over the next year, down from the 4.9% reported in the survey’s November release and the lowest reading in 15 months. Inflation expectations over the coming five years remained unchanged from November at 3%. The report notes that, “Gains in the sentiment index were seen across multiple demographic groups, with particularly large increases for higher-income families and those with larger stock holdings, supported by recent rises in financial markets.”
While expectations for inflation remain well above historical levels, the survey results are a positive sign for U.S. consumers and for the Biden Administration as they head into the final stretch of the holiday season.
Read the full report here.
