People shop in Delta City shopping mall, circa December 2013 in Belgrade
U.S. consumer sentiment rose for the first time in five months, bolstered by a more optimistic outlook for personal finances as inflation expectations improve. The preliminary December sentiment index rose to 53.3, from 51 a month earlier, according to the University of Michigan. The survey period includes responses from November 18 to December 1, following the end of the record-long federal government shutdown.
Consumers expect prices to rise at an annual rate of 4.1 percent over the next year, down from expectations a month earlier and the lowest since January, the report showed. And they expect costs to rise at an annual rate of 3.2 percent over the next five to ten years.
Still, consumers remain troubled by a stubbornly high cost of living, which has been a major drag on sentiment this year. “Consumers have noted that the soaring inflation they feared in April and May 2025, at the height of tariff developments, has not come to fruition at this time,” Joanne Hsu, director of the survey, said in a statement. “Still, inflation expectations over both time horizons remain higher than average readings from both 2024 and 2020.”
A separate report from the government showed inflation-adjusted consumer spending was little changed in September, after a revised 0.2 percent increase in the prior month. But more recent holiday shopping data points to resilient consumer demand. Sales on Black Friday, excluding auto dealers, increased 4.1 percent from a year earlier, according to data from Mastercard SpendingPulse. That surpassed last year’s 3.4 percent growth.
Although retail executives have consistently warned that consumers are cautious, a string of stronger-than-expected results indicates that many shoppers aren’t holding back. This week, lingerie company Victoria’s Secret & Co. and cosmetics chain Ulta Beauty Inc. both raised their outlooks for the full year.
The increase in sentiment was led by younger consumers, but the 13 percent rise in expectations about Americans’ personal financial situations was broader. A measure of the outlook for finances climbed to the highest level since February.
Views about the job market improved slightly this month, though a majority of respondents still expect unemployment to rise in the coming year. It has become more difficult for unemployed Americans to find a new job, and there has been a spike in high-profile layoff announcements from large companies.
.What Bloomberg economists say...“Consumer sentiment was boosted in December by the end of the government shutdown. Still, while worries about the labor market and high prices have moderated, they haven’t dissipated entirely.”— Eliza Winger, economist |
A Harris Poll conducted for Bloomberg News in October showed that 55 percent of employed Americans were concerned about losing their jobs. And almost half said they believe it would take them four months or longer to find a new job of similar quality if they lost their current position.
“As we navigate into 2026, we’re going to see the increased importance of income trends driving consumer spending activity,” said Gregory Daco, chief economist at EY-Parthenon. “And, in that regard, the softening in the labor market is a key area of concern.”
The overall expectations index rose to a four-month high of 55, from 51 in November, while the current conditions gauge fell to a fresh record low.
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