Consumer confidence surged this month on a better assessment of the U.S. economy, though opinions continued to diverge between Republicans and Democrats, with inflation expectations also ticking higher.
The University of Michigan's index of consumer sentiment climbed to 74.0 at the start of December, its highest level in seven months, from 71.8 last month. That was a little better than expectations of 73.0 from economists polled by The Wall Street Journal.
Consumer expectations continued to be split in the post-election landscape, improving for Republicans while declining for Democrats, with independents between the two, according to the survey released Friday.
Rather than purely an expression of partisanship, this was a response to changes in expectations for the national economy, reflecting the collective economic experiences and observations of the American population as a whole, according to the survey's director, Joanne Hsu.
"Democrats voiced concerns that anticipated policy changes, particularly tariff hikes, would lead to a resurgence in inflation. Republicans disagreed; they expect the next president will usher in an immense slowdown in inflation," she said.
Consumers notably rated the current economic conditions much higher than last month, helped by a surge in buying conditions for durable goods. However, rather than a sign of strength, the increase was due to a perception that purchasing durables now would enable buyers to avoid future price increases, Hsu said.
That is reflected in higher inflation expectations in the survey. Consumers now expect inflation in the year ahead to average 2.9% this month, from 2.6% in November, the highest reading in six months.