The final December reading for the consumer sentiment index came in at 53.3. This reflects a slightly improved mood among consumers compared to previous data.

Inflation expectations showed a modest increase. The 1-year inflation expectation rose to 4.2% from 4.1%, while the 5-year expectation climbed to 3.4% from 3.2%.

Current economic conditions were rated at 52.4, up from 50.7, and expectations for the future improved marginally to 55.0 from 54.6.

It is important for forex traders to note that this consumer sentiment survey has become less reliable as an economic indicator. Responses have become increasingly politicised, and inflation data remain volatile. Although it was once considered tier-2 economic data, its influence has diminished over time. During the COVID-19 pandemic, a rise in inflation expectations briefly spooked the Federal Reserve into considering more aggressive rate hikes. However, that spike was later revised down, undermining the earlier market reaction and causing embarrassment for the Powell-led Fed.

Regarding the latest report, it aligns with a slightly more positive consumer mood. Holiday spending was solid but not exceptional, suggesting moderate economic confidence without significant enthusiasm.

Original Source: Adam Button of investinglive.com