U.S. Consumer Sentiment Hits Seven-Month High

U.S. consumer sentiment rose to a seven-month high as record stock prices bolstered optimism and Americans' buying attitudes improved, adding to renewed economic cheer following a robust jobs report.

The University of Michigan's preliminary sentiment index for December increased to 99.2 from 96.8 in November, exceeding all but one forecast in a Bloomberg survey of economists. The gauge of current conditions climbed to a one-year high of 115.2 while the expectations index rose to 88.9, the highest since July, data showed Friday.

Key Insights

• The report said the sentiment increase was concentrated among upper-income households, who stand most to benefit from stock prices that reached a record in late November. At the same time, sentiment has gained for four straight months since the measure fell to the lowest in almost three years in August on concerns about how tariffs would impact the economy.
• Partisan differences also sharpened, as Republicans' sentiment jumped to the highest since President Donald Trump took office, while Democrats recorded a decline and independents were little changed. Virtually no respondents spontaneously mentioned impeachment, according to the report.
• The index of buying conditions for household durables rose to the highest in a year, driven by renewed price discounts, boding well for retailers' holiday sales. Future job and income prospects also spurred increases in vehicle buying plans, according to the report.
• The report comes on the heels of jobs data Friday showing U.S. payrolls trounced forecasts in November with a 266,000 gain as unemployment matched a half-century low. A strong labor market and steady wage gains should continue to support sentiment measures and consumer spending in coming months.