A survey that was released on Friday claims that in December, the consumer sentiment index rose to record high in 8 years. The consumer sentiment index rose to record high on increased wages and job prospects and on lower prices for gasoline.
The Thomson-Reuters/University of Michigan index regarding consumer sentiment rose to 93.8 in December. Analysts said that this level is the highest in 8 years, from a reading of 88.8 in November. Economists interviewed by the Wall Street Journal were expecting the index to rise to 90.0.
The progress comes after various other reports claiming a growth in optimism amidst consumers, predicting good things for retailers during the holiday season of shopping and the wider economy. Americans are usually more likely to spend when they sense better things about the present and future position of the U.S. economy.
“The ongoing improvement in sentiment continues to suggest that consumers remain more optimistic on the economy as labor-market slack declines, equity prices continue to march higher, and gasoline prices decline,”
Said economist Gennadiy Goldberg of TD Securities.
Consumer spending signifies about two thirds of the United States economic output. Economists have said that they believe the higher level of optimism will mean a rise in spending within the fourth quarter. This will keep the United States economy growing steadily in spite of threats on the economies overseas.
Economists said that the report published on Friday by the University of Michigan revealed the estimate of the perspective of Americans greatly rose from 79.9 in November to 86.1. Their evaluation regarding present conditions also rose to 105.7 from 102.7 in November.
It seems like Americans are responding to the price drop in gasoline and the pickup in hiring. Thursday, the Commerce Department said that the United States retail sales have climbed 0.7 percent in November, which is the most significant leap in eight months, after a sound gain in October.
The report published on Friday also showed that in spite of the falling prices for gasoline, Americans expected a higher inflation in the future. The outlook for inflation climbed to 2.9 percent from a 2.8 percent in November. However, some measures of inflation expectations based on the market have dropped in the recent months.