Americans are feeling more optimistic about the economy as the year winds to a close.

Consumer sentiment surged 14% in December, following four consecutive months of declines, according to the University of Michigan Surveys of Consumers.

What You Need To Know

  • Consumer sentiment surged 14% in December, according to the University of Michigan Surveys of Consumers

  • The increase was across all ages, incomes, education levels, political affiliations and regions of the country

  • A majority of Americans are expecting their incomes to rise at least as fast as inflation in 2024

  • The Biden administration reported Friday that inflation is at a pre-pandemic level of 2%

“Consumers are increasingly confident the inflation slowdown will continue,” Surveys of Consumers chief economist Joanne Hsu said in a statement. She noted that Americans’ improved mood “showed a remarkable level of consensus,” increasing among all ages, incomes, education levels, political affiliations and regions of the country.

The University of Michigan index is based on five components, all of which rose this month — a rare occurrence, Hsu said. Consumers’ short-run economic outlook increased 28% in December while their long-run outlook rose 33%. Their views about the future path of inflation, the stock market and buying conditions for vehicles and durable goods also improved.

The survey found that a majority of Americans are expecting their incomes to rise at least as fast as inflation in 2024.

The White House cheered Friday’s news, hailing it as evidence that President Joe Biden's economic plan is working.

“Americans have seen their income grow 3.7% over the last year, and today we learned that for the last 6 months, inflation has been at the pre-pandemic level of 2%,” White House deputy press secretary Andrew Bates said in a memo about the presiden't economic policies, which they've branded as "Bidenomics."

Bates said inflation is lower and wages are higher than when President Biden took office almost three years ago.

The University of Michigan consumer sentiment finding mirrors the Conference Board’s Consumer Confidence Index from earlier this week, which said consumers were ending the year “with a surge in confidence and restored optimism for 2024.”

Hsu cautioned the optimism could be tempered come next November.

“Many consumers provided caveats on their views, as they believe that the election next year may have important implications for the trajectory of the economy,” Hsu said. “While consumers see the economy more favorably than they did the last few months, the strength of their views remain tentative.”