(Reuters) – U.S. consumers’ moods brightened unexpectedly in early December with an outsized increase in sentiment among lower-income households lifting overall sentiment from the lowest in a decade, a survey showed on Friday.
The University of Michigan’s closely watched Consumer Sentiment Index rose to 70.4 this month from a final November reading 67.4, which had been the lowest since November 2011. Economists polled by Reuters had been expecting it to slip further, with a median estimate of 67.1.
Readings of both current conditions and future expectations also improved unexpectedly.
The increase in headline sentiment was powered entirely by a 23.6% improvement among households in the lower one-third of the survey’s income distribution, the biggest monthly increase for that group since 1980. This was driven by expectations of improving incomes in the year ahead. Sentiment slipped further for the middle and upper thirds.
“While it is usually assumed that such extreme changes represent an erroneous result due to small samples, in 1980 it was the households in the bottom income third that initially signaled the end of the first part of the double recession in 1980-82, with upper income households following in subsequent months,” survey Director Richard Curtin said in a statement.
(Reporting By Dan Burns; Editing by Chizu Nomiyama)
