Consumer Sentiment Rose 5.9% in Early December
Ann Arbor, MI, December 11, 2020-Consumer sentiment rose 5.9% to 81.4 in early December, according to preliminary results from the University of Michigan Survey of Consumers.
This represents a 18% decline year over year.
“Consumer sentiment posted a surprising increase in early December due to a partisan shift in economic prospects,” says Survey of Consumers chief economist Richard Curtin. “Following Biden's election, Democrats became much more optimistic, and Republicans much more pessimistic, the opposite of the partisan shift that occurred when Trump was elected. In the five months from August to December, the Expectations Index among Democrats rose by 39.5 points, and fell among Republicans by 34.9 points (see the chart). As has been documented in the past four years, self-identified Independents adopted more balanced views, maintaining their economic expectations in December at the same unfavorable levels as when the covid crisis began nine months ago. It was nonetheless surprising that the recent resurgence in covid infections and deaths was overwhelmed by partisanship. Most of the early December gain was due to a more favorable long-term outlook for the economy, while year-ahead prospects for the economy as well as personal finances remained unchanged. Just as four years ago, the post-election partisan shifts in economic expectations are too extreme to be justified by economic fundamentals. These divergences may persist largely unchanged in the year ahead. In the immediate future, job losses and income declines due to shutdowns are expected to increase, and the long priority queues before most consumers can be vaccinated will make the wait amid rising deaths all the more difficult to endure. A renewed round of federal relief will prevent much greater financial harm to households, small firms, and local governments. Even if immediately adopted, the payments will not reach recipients for at least a month, allowing renewed hardships to dominate the holiday season. As a consequence, the DC dysfunction may act as the grinch that stole Christmas!”