(The Center Square) – Consumers are becoming increasingly confident in the economy, the December results rising for the fifth month in a row.
This is according to preliminary results from the University of Michigan’s national December Survey of Consumers.
From November to December, consumer sentiment improved by 3%, coming in at 74%.
Yet, some consumers are still concerned about future price increases. Concerns about the economy were correlated with party-affiliation, with Independents more in the middle on the issue.
“Democrats voiced concerns that anticipated policy changes, particularly tariff hikes, would lead to a resurgence in inflation,” the survey said. “Republicans disagreed; they expect the next president will usher in an immense slowdown in inflation. As such, national measures of sentiment and expectations continue to reflect the collective economic experiences and observations of the American population as a whole.”
Joanne Hsu, director of the Surveys of Consumers, gave a presentation at Michigan state’s January Consensus Revenue Estimating Conference.
There, she reported that consumer sentiment reached an all-time low in 2022, but has lifted almost 50% since then as inflation has softened.
Hsu warns the economic recovery has been “uneven across income distribution,” with those with lower incomes still struggling the most.
The December survey found overall inflation expectations for 2025 rose from 2.6% to 2.9% from November to December, making it the highest in the past six months. Yet, long-run inflation expectations decreased from 3.2% in November to 3.1% December.
Overall, while all party affiliations had an increase in current economic conditions, consumer expectations decreased for Democrats while increasing for Republicans.
This is all part of a post-election recalibration of the economy, with some Democrats and Independents implementing a “buy-in-advance” policy as concerns about the impact of potential tariffs grow.
Consumers the survey interviewed in December were much more likely to reference tariffs spontaneously, though that was largely driven by Democrats.
“Tariffs were almost always mentioned in a negative context: consumers referring to tariffs reported much worse expectations for business conditions and inflation than consumers who did not,” the survey reported.
It also found that Republicans are much more concerned with current high prices over future prices, showing they “broadly expect inflation to slow dramatically in both the short and long run.”
