Falling gas prices, retailer discounts and diminishing inflation expectations improved consumer sentiment this month. According to the Reuters/University of Michigan Surveys of Consumers, the confidence index for December rose to 59.1 from November’s 55.3.
That was the highest confidence index since September. But, sentiment is still depressed by historical standards, Reuters reports. The University of Michigan confidence index dates back to 1952, and the record low of 51.7 hit in May 1980.
Despite the index edging up in December, “consumers have become even more pessimistic about prospects for the overall economy, especially the outlook for employment,” according to Reuters.
The drop in inflation expectations will help consumers, as well as the Federal Reserve’s attempt to stimulate the economy. However, it also will increase worries that the recession could lead to debilitating deflation.