Consumer Sentiment: Expectations Fall, Mostly Among Democrats

Bottom Line: Politics is back as a major driver of consumer sentiment as Congress gets closer to passing tax legislation. Consumers' views of the current situation remained strong in this early December survey, while the index of their future expectations fell. That said, the index was skewed by a larger share of Democrats expressing concern about future economic prospects in light of the proposed legislation.

• 1-year ahead inflation expectations were up sharply, now 2.80%, a level not seen since April '16, while 5-year expectations were up 0.10% to 2.50%.
• The sharp divide that developed again between party affiliation and the tax bill potentially getting passed will likely make the revisions to this survey important over the course of the rest of December.

Consumer Sentiment FELL by 1.7 points in early December to 96.8%, compared with market expectations for an increase to 99.0%. With this month's slight decline, sentiment is now 1.4% BELOW its year ago level. Current Conditions ROSE by 2.4 points to 115.9%. This is 3.6% ABOVE their year ago level. Consumer Expectations FELL by 4.3 points to 84.6%. With this month's modest decline, expectations are 5.5% BELOW its year ago level.