Consumer Sentiment Surges in December, Inflation Expectations Fall

Broad-based optimism observed as lower gas prices and declining energy costs contribute to improved economic outlook.

Consumer sentiment index jumped 13% in December, ending a four-month decline and returning to August levels.
Inflation expectations for the year ahead fell to 3.1% from 4.5% last month, nearing pre-pandemic levels.
Improved sentiment was observed across all demographics, including age, income, education, geography, and political identification.
Lower gas prices and declining energy costs have contributed to the slowing inflation and improved consumer sentiment.
Federal Reserve officials consider consumer expectations a key in the way inflation moves, so the switch in sentiment could further convince policymakers to keep interest rates on hold and possibly start cutting in 2024.