Consumer Sentiment Rises in December
Consumer sentiment, also known as consumer confidence, measures how U.S. consumers feel about the economy, wages, jobs and their personal finances.
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Senior Editor & Content Strategist Updated on Dec. 9.
New York Fed: Consumers expect conditions to worsen
The New York Fed’s Survey of Consumer Expectations for November, released on Dec. 8, shows consumers are pessimistic about their own financial situations. Perceptions about their households’ finances declined significantly compared to a year ago, according to the report. A smaller share of those surveyed also said their households are likely to be better off at the same time next year.
More findings below.
University of Michigan: Index lifts in December
The University of Michigan’s Index of Consumer Sentiment inched up slightly in December, according to the first results for the month released on Dec. 5.
Joanne Hsu, who directs consumer surveys at the University of Michigan, said in the release that the increase in consumer sentiment was concentrated among young consumers. Despite expectations improving (led by a 13% rise in personal finance expectations), the reading is nearly 12% below the start of 2025. Labor market condition expectations improved slightly, but remained low.
“Consumers see modest improvements from November on a few dimensions, but the overall tenor of views is broadly somber, as consumers continue to cite the burden of high prices,” said Hsu.
Here’s what Elizabeth Renter, senior economist at NerdWallet, says about the latest consumer sentiment report:
Consumer sentiment ticked up slightly early this month, no doubt buoyed by the federal government’s reopening since the last survey. But this little bump in economic sentiment doesn’t mean people think things are going well — the measure is still down nearly 30% from last year at this time.
People also feel a little better about what’s coming; expectations around personal financial conditions improved and inflation expectations came down slightly. A more optimistic outlook as the year comes to a close isn’t entirely uncommon, but the near future may look particularly bright when emerging from a period of great uncertainty.
More than 3 in 5 Americans (63%) say 2026 will be better for them financially than 2025 has been, according to a recent NerdWallet survey. However, many are less than confident about their ability to withstand financial and economic setbacks such as a recession or income loss. Preparing for potential setbacks like this by amassing an emergency fund and paying down your debt can provide peace of mind and be a useful exercise even if the economy flourishes.
More findings from the University of Michigan
The University of Michigan Index of Consumer Sentiment’s final reading for November registered at 51, compared to October’s reading of 53.6, according to the survey released on Nov. 21.
The university’s Index of Current Economic Conditions registered 51.1 in November, down from 58.6 in October. The Index of Consumer Expectations rose to 51 in November after hitting a record low of 49 in its initial reading earlier in the month. In October, the index was 50.3, just 0.3 points above the previous record of 50 set in June 2022.
Conference Board: Confidence tanks in November
The Conference Board’s Consumer Confidence Index report for November (released Nov. 25) went down by 6.8 points in November from 95.5 in October. Both the Present Situation Index and the Expectations Index declined, as well.
“Consumer confidence tumbled in November to its lowest level since April after moving sideways for several months,” said Dana M. Peterson, chief economist at The Conference Board. Peterson said that writ-in responses from consumers mainly focused on prices and inflation, tariffs and trade, as well as politics and the government shutdown. “The overall tone from November write-ins was slightly more negative than in October,” said Peterson.
Some key takeaways from the report:
- Consumers' stock price outlook dipped slightly, but remained largely positive.
- Inflation expectations remained high.
- Interest-rate expectations softened.
- Assessments of family finances worsened, especially the assessment of current conditions, which hit their lowest level since Aug. 2024.
- More consumers believe the U.S. is already in a recession.
- Plans for big-ticket purchases fell.
- Services spending plans for the next six months declined overall.
- The top five categories for planned services spending include restaurants, bars, take-out; health care; streaming, internet and mobile services; beauty and personal care; and hotels, motels for personal travel.
- Consumers spending is trending up in “cheap thrills” and necessary services, while spending on expensive and “highly discretionary activities” are declining.
More findings from the Conference Board
The Conference Board’s Consumer Confidence Index went down 6.8 points in November to 88.7, the latest report released on Nov. 25 shows.
The board’s Present Situation Index — measuring consumers’ current assessment of business and labor market conditions — declined by 4.3 points to 126.9.
The Expectations Index — measuring consumers’ short-term outlook for income, business and labor market conditions — declined 8.6 points to 63.2. The same index was at 54.4 in April, the lowest level in nearly 14 years.
What is consumer sentiment?
Consumer sentiment, also known as consumer confidence, is an index of how U.S. consumers are feeling about the current and future state of the economy, and all that folds into the economy: the job market, wages, business conditions and their personal finances. It’s a valuable tool for economists, as consumer sentiment can be used as an early predictor of economic changes.
How people feel about the economy can directly impact the economy, because consumers' attitudes often affect how much they spend on things like food, transportation, household goods, entertainment and more.
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In 2023, consumers’ personal spending made up 67.9% of the U.S. GDP, or gross domestic product, according to the Federal Reserve Bank of St. Louis. That’s a significant majority of the nation’s GDP, so keeping a close eye on consumer sentiment is key in foreseeing potential economic slumps or rallies.
When the economy is in a recession, consumer sentiment falls. On the flip side, when the economy is expanding, consumer sentiment rises. The index does typically peak before a recession, though.
Unlike other indexes, such as the Consumer Price Index (CPI), consumer sentiment isn’t calculated using spending data or hard figures. Instead, economists rely on two major surveys of consumer confidence: The University of Michigan’s Surveys of Consumers and the Conference Board’s Consumer Confidence Survey.
Each survey collects the general attitudes and opinions of hundreds of U.S. consumers. Then, those opinions are assigned numeric values and aggregated into one number, or index.
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What is consumer sentiment like right now?
The University of Michigan’s Index of Consumer Sentiment
The first reading for December from the University of Michigan, released on Dec. 5, shows:
- The Index of Consumer Sentiment registered at 53.3 for December, up from 51 for November.
- Current Economic Conditions registered at 50.7 for December, down from 51.1 for November.
- The Index of Consumer Expectations registered at 55 for December, up from 51 for November.
How the University of Michigan creates its index
The Index of Consumer Sentiment is one of three indexes derived from the University of Michigan’s Surveys of Consumers, which started in 1946. Originally conducted annually, the surveys switched to a monthly cadence in 1978. The surveys have a sample size of roughly 600 people selected randomly from the 48 adjoining U.S. states and the District of Columbia.
The surveys include roughly 50 questions covering personal finances, business conditions and buying conditions. From those surveyed, three indexes are produced: the Index of Consumer Sentiment, the Index of Consumer Expectations and the Index of Current Economic Conditions.
The Index of Consumer Sentiment is the most commonly cited index of the bunch. It’s derived from these five questions:
- "We are interested in how people are getting along financially these days. Would you say that you (and your family living there) are better off or worse off financially than you were a year ago?"
- "Now, looking ahead: Do you think that a year from now you (and your family living there) will be better off financially, or worse off, or just about the same as now?"
- "Now, turning to business conditions in the country as a whole. Do you think that during the next twelve months we'll have good times financially, or bad times, or what?"
- "Looking ahead, which would you say is more likely: that in the country as a whole we'll have continuous good times during the next five years or so, or that we will have periods of widespread unemployment or depression, or what?"
- "About the big things people buy for their homes, such as furniture, a refrigerator, stove, television, and things like that. Generally speaking, do you think now is a good or bad time for people to buy major household items?"
Historically, the surveys have been conducted by phone. Starting in July 2024, they'll be conducted online, with researchers aiming for 900 to 1,000 respondents.
The Conference Board’s Consumer Confidence Index
Conference Board data for November, released on Nov. 25 shows:
- The Conference Board’s Consumer Confidence Index fell 6.8 points to 88.7, from 95.5 in October.
- The Present Situation Index went down by 4.3 points to 126.9.
- The Expectations Index decreased 8.6 points to 63.2.
How the Conference Board’s Consumer Confidence Index comes together
The Conference Board’s Consumer Confidence Survey was launched in 1967 as a mail survey conducted every other month. Today, the survey is conducted online, on a monthly basis, with a sample size of roughly 3,000 respondents.
The Conference Board issues a five-question survey to calculate three distinct indexes: the Consumer Confidence Index, the Present Situation Index and the Expectations Index. Once the surveys have been completed, each question is given a relative value. Then, those values are compared against their relative values from 1985 — the survey’s benchmark year, with an index set at 100.
The Consumer Confidence Index is the average index for all five questions. The Present Situation Index is calculated using the average indexes for the first two questions, and the remaining three questions determine the Expectations Index.
Present Situation Index
- Respondents’ appraisal of current business conditions.
- Respondents’ appraisal of current employment conditions.
Expectations Index
- Respondents’ expectations regarding business conditions six months hence.
- Respondents’ expectations regarding employment conditions six months hence.
- Respondents’ expectations regarding their total family income six months hence.
Consumer Confidence Index
This is the average index for all five questions above.
The Federal Reserve Bank of New York’s Survey of Consumer Expectations
Some highlights for November from the Federal Reserve Bank of New York’s Survey of Consumer Expectations released on Dec. 9 shows:
- Inflation. Median inflation expectations were unchanged at 3.2% for the one-year-ahead one-year ahead horizon and held steady at 3% for both the three-year horizon and five-year horizon.
- Commodity prices. Year-ahead price expectations rose for food (up 0.2 percentage point to 5.9%), gas (up 0.6 percentage point to 4.1%), medical care (up 0.7 percentage point to 10.1%), college education (up 0.2 percentage point to 8.4%) and rent (up 1.1 percentage points to 8.3%). Expectations for medical care costs reached their highest level since January 2014.
- Home price growth. Median year-ahead home price growth expectations held steady at 3% for the sixth month in a row. Since August 2023, the range has moved between 3% and 3.3%.
- Earnings expectations. Median one-year-ahead expectations for earnings growth held steady at 2.6%.
- Unemployment expectations. The mean probability that the unemployment rate will increase a year from now decreased by 0.4 percentage points to 42.1%.
- Probability of job loss. The mean expectation of job loss over the next 12 months edged down by 0.2 percentage point to 13.8%, the lowest reading since December 2024.
- Probability of quitting. The mean expectation of quitting a job over the next 12 months went down 1.1 percentage points to 17.7%, the lowest reading since February.
- Probability of finding a job if job loss occurs. The mean perceived probability of finding a job over the next 12 months rose 0.5 percentage point to 47.3%, below the 12-month trailing average of 49.8%.
- Household income growth. The median expectation of household income growth went up by 0.1 percentage point to 2.9%.
- Household spending growth. Households expect to spend 5% more over the next year, a 0.2 percentage point increase.
- Credit access. Perceptions of credit access declined from a year ago, with fewer respondents saying they expect it to become easier to obtain credit.
How the Federal Reserve Bank of New York conducts its survey
The Federal Reserve Bank of New York’s Survey of Consumer Expectations focuses on expectations about economic outcomes.
The survey, which is conducted by NielsenIQ, launched in 2013. It’s an internet-based survey that asks a rotating panel of 1,300 heads-of-household about their expectations of the economy, as well as their own personal finances related to the following categories:
Inflation:
- Inflation expectations.
- Inflation uncertainty.
- Probability of different inflation outcomes.
- Home price change expectations.
- Home price change uncertainty.
- Commodity price change expectations.
Labor market:
- Earnings growth expectations.
- Earnings growth uncertainty.
- Job separation expectations.
- Job finding expectations.
- Moving expectations.
- Expectations of higher unemployment.
Household finance:
- Household income growth expectations. Household spending growth expectations. Change in taxes. Change in credit availability. Debt delinquency expectations. Expectations of higher interest rate on savings accounts. Household financial situation.Expectations of higher stock prices. Government debt growth expectations.
When do the next consumer sentiment reports come out?
The University of Michigan’s next set of results for its Surveys of Consumers will be released on Friday, Dec. 19.
The Conference Board will release its next Consumer Confidence Survey on Tuesday, Dec, 23.
The New York Fed will release its next Survey of Consumer Expectations on Thursday, Jan. 8.
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