Consumer Sentiment Higher Than Expected

Consumer sentiment ends this month at a stronger-than-expected index level of 98.3, up 8 tenths from both the preliminary estimate and from November. The gain reflects a nearly 4-point jump in the current conditions component to 116.1 which is one of the strongest readings of the year and a favorable indication for holiday spending.

An offset, however, is a dip in the expectations component to 87.0 vs November's 88.1 that reflects a noticeable easing in optimism over the jobs outlook. The report notes that trouble in the stock market was not a major factor in the expectations decline.

Like the PCE price indexes released with the personal income and outlays report, inflation readings are very subdued, at 2.7 percent for the year-ahead outlook and 2.5 percent for the 5-year outlook which are both down 1 tenth from November.

And the feeling of this report is very much like personal income and outlays, hinting at consumer spending strength at a time of limited income growth and very flat inflation.