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Consumer Sentiment: Rebound Confirmed, Risks Remain

December 23, 2021
Bottom Line:  After hitting post-pandemic lows in November, consumer sentiment rose in December, according to the University of Michigan survey results.  The final reading released this morning showed few changes to the preliminary results. Current conditions were a touch higher than in November, but expectations improved notably. Overall, the aggregate US consumer remains well-positioned to spend with stronger personal balance sheets at an aggregate level from the pandemic-fueled stimulus payments. However, they are more concerned about the purchasing power of their assets and incomes than at any time since the 1980s.  As a result, the potential for consumers to pull back on spending is very high, though so far, any reduction in spending has been modest.
Consumer Sentiment was REVISED UP by 0.2 points in late December to 70.6, compared with market expectations for no change to 70.4.
Sentiment has deteriorated by -2.2 points over the past 3 months. With this month's modest increase, compared to November's final level of 67.4, sentiment is 12.5% BELOW its year-ago level.
Current Conditions were REVISED DOWN by 0.4 points to 74.20. Current conditions are now 17.6% BELOW their year-ago level.
Consumer Expectations were REVISED UP by 0.5 points to 68.3.   With this month's modest increase, compared to November's final level of 63.5, expectations are 8.4% BELOW their year-ago level.