Consumer sentiment rose for the fifth consecutive month, reaching its highest reading since April 2024.

The prospect of new policies after the White House transition continued to boost the economic outlook of Republicans, while Democrats are more pessimistic about the path of the economy, a reflection of the two groups’ contrasting views on how Donald Trump’s policies will influence the economy, said economist Joanne Hsu, director of the University of Michigan Surveys of Consumers.

Independents remain in the middle, and on balance, consumer views extended their steady upward trajectory in December. Sentiment is currently about midway between the all-time low reached in June 2022 and pre-pandemic readings.

“Broadly speaking, while consumers still do not feel that they are thriving, they view the economy much more favorably than they did two years ago when inflation was at a peak,” Hsu said. “Still, high prices remain a top concern for consumers. Furthermore, many consumers are worried that new policies like tariff hikes might further exacerbate high prices. That said, consumers expect gas prices to remain relatively low, which would be a welcome development heading into the holiday travel season.”

Buying conditions for durables improve amid worries about future inflation

This month’s improvement in Current Conditions was driven by a surge in buying conditions for large durable goods. While favorable buying conditions are typically a sign of strength, this month’s rise in durables was primarily due to a perception that inflation would rebound in the near future.

About 22% of consumers spontaneously reported that purchasing durables now would enable buyers to avoid future price increases—the highest reading since 1990—up from only 10% in both October and November, Hsu said.

Many of these consumers, mostly Democrats and Independents, specifically identified future tariffs as the culprit. Republicans, in contrast, were much more concerned about persistently high prices in the present day.

Consumers disagree on potential effects of new policies

Divergent patterns across the political spectrum reflect, in part, differences in how consumers view the economic policies proposed by the next president, Hsu said.

Throughout this month’s interviews, Democrats voiced concerns that anticipated policy changes would lead to a resurgence in inflation. Republicans disagreed; they expect the next president will usher in an immense slowdown in inflation. About 25% of consumers spontaneously mentioned tariffs during interviews this month, up from 10% in November and only 2% in September. Tariffs were generally mentioned in a negative context.

Consumer Sentiment Index

The Consumer Sentiment Index rose to 74.0 in the December 2024 survey, up from 71.8 in November and above last December’s 69.7. The Current Index rose to 75.1, up from 63.9 in November and above last December’s 73.3. The Expectations Index fell to 73.3, down from 76.9 in November and above last December’s 67.4.

About the surveys

The Surveys of Consumers is a rotating panel survey at the University of Michigan Institute for Social Research. It is based on a nationally representative sample that gives each household in the coterminous U.S. an equal probability of being selected. Interviews are conducted throughout the month by web. The minimum monthly change required for significance at the 95% level in the Sentiment Index is 4.8 points; for the Current Index and Expectations Index, the minimum is 6 points.