The University of Michigan's consumer sentiment index, which was released on Wednesday, has surged to 92.6 from 91.3 in November. Lifted in part by a low inflation rate and a steadying job market, the numbers this December are the highest since July, showing a significant increase in the average American's purchasing power, according to Yahoo! News.
In fact, the 92.6 rating this December is just a couple of steps below the year's average of 92.9, which is already the highest annual average in the United States in 11 years.
Playing a significant role in the improved ratings is the improving mood of the American consumer, which has been boosted by the steadying job market. Due to steady and stable hiring, the unemployment rate in the country has gone down to a seven-year low of just 5 percent, reports Newser.
Inflation has remained consistently low as well, rising just 0.4 percent during the past 12 months, as reflected by the Federal Reserve's preferred gauge. This trend, in turn, is perceived to have spurred consumers to spend more on big-ticket goods such as household appliances.
With wages and salaries rising 0.5 percent, adding to a 0.6 percent gain in October, the labor market's unemployment rate has reached a range which the Federal Reserve officials consider as being in line with full employment, according to MSN Money.
Chris Christopher, an economist at IHS Global Insight, believes that the trends currently exhibited by the consumer sentiment index point to a strong spending rate among Americans in the following year. "The economic fundamentals are in place for relatively strong 2016 consumer spending. Several positives such as lower gasoline prices, modest consumer price inflation and increasing consumer confidence are assisting many lower-and middle-income households in spending a little more freely," he said.
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