Pocketbook issues continue to dominate consumer views of the economy.
 

That’s a 50-year chart from the University of Michigan Sentiment Final Results for December 2025

Consumer sentiment confirmed its early month reading, inching up less than two index points from November, within the margin of error. While lower-income consumers posted gains, sentiment for higher-income consumers was little changed. Buying conditions for durable goods fell for the fifth straight month, whereas expectations for personal finances and business conditions rose in December. Labor market expectations lifted a bit this month, though a solid majority of 63% of consumers still expects unemployment to continue rising during the next year. Despite some signs of improvement to close out the year, sentiment remains nearly 30% below December 2024, as pocketbook issues continue to dominate consumer views of the economy.

Year-ahead inflation expectations decreased for the fourth consecutive month to 4.2%. This is the lowest reading in 11 months but is still above the 3.3% seen in January. Long-run inflation expectations eased from 3.4% last month to 3.2% in December, matching the January 2025 reading. In comparison, readings ranged between 2.8 and 3.2% last year, and were below 2.8% throughout 2019 and 2020.

Data download is sporadic in the 50-year tables. The lead chart is from the University of Michigan, with my anecdotes.

Here are some charts since 2015.

University of Michigan Consumer Sentiment Overall Index
 

University of Michigan Consumer Sentiment Current Conditions
 

Current conditions at 50.4 is a record low.

University of Michigan Consumer Inflation Expectations
 

Inflation Expectations

• One-Year Look Ahead: 4.2 Percent
• One-Year Look Ahead 3-Month Moving Average: 4.4 Percent
• Five-Year Look Ahead: 3.2 Percent
• Five-Year Look Ahead 3-Month Moving Average: 3.5Percent

Hello Jerome Powell, is 4 percent “well anchored”?
Close to target?

It’s a good thing for the Fed that inflation expectations don’t matter.

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Please note Only 56 Percent of Republicans Say the Economy Is Good

If you don’t understand why, please click on some of the preceding links.

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