Consumer Sentiment Soars with Lower Inflation Expectations

Consumer sentiment surged in December, with a 13% increase from the previous month and a 16% increase from the year-ago level. The rise was attributed to improved inflation expectations, with year-ahead inflation expectations dropping to 3.1% from 4.5% in November. Long-run inflation expectations fell to 2.8% from prepandemic levels. Additionally, consumers experienced a 24% increase in short- and long-run outlook for business conditions. The survey also indicated a growing concern about the potential impact of next year's elections, implying expectations of favorable economic outcomes.