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A gauge of U.S. consumer sentiment unexpectedly increased in early December to the second-highest level since March, amid prospects for a vaccine coming soon to tame the pandemic.
The University of Michigan’s preliminary sentiment index rose 4.5 points to 81.4, from a final November reading of 76.9, according to figures Dec. 11 that topped all estimates in Bloomberg’s survey of economists. The median projection was 76.
The gauge of current conditions rose to 91.8, the highest since March, while a measure of expectations improved 4.2 points to 74.7. Respondents’ outlook for the economy in the next five years climbed in early December by the most since May 2011.
The brighter sentiment likely reflects optimism around the imminent distribution of a vaccine, which is seen easing business restrictions and allowing many in-person activities to resume. Even so, the virus continues to spread unchecked, with record cases and deaths, while lawmakers remain at odds over a new aid package.
The fate of an additional federal pandemic relief package, however, remains unresolved. Without a deal by year’s end, millions of Americans could be left starting the new year without unemployment benefits.
The survey conducted Nov. 23 to Dec. 9 also showed that while long-term views of business conditions improved markedly, consumer attitudes about their financial situation were largely unchanged.
The report follows fresh signs that the labor market may be faltering. Hiring slowed in November and jobless claims rose last week to the highest since September, adding to signs that more Americans are confronting greater financial stress.
The survey indicated inflation is expected to remain muted. Consumers saw prices rising 2.3% in the year ahead compared with November’s 2.8% and the lowest since March.
In a separate report Dec. 11 from the Labor Department, the producer price index rose 0.1% from the prior month, suggesting that firms have little pricing power as the pandemic continues to weigh on the economy.
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