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Consumer sentiment finishes 2023 on high note as inflation wanes

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The numbers: Consumer sentiment finished 2023 at a five-month high, perhaps a good sign for the economy as a new year gets under way.

The final reading of the sentiment survey inched up to 69.7 from 69.4 earlier in the month, the University of Michigan said Thursday.

The consumer-sentiment survey reveals how Americans feel about their own finances as well as the broader economy. The index had fallen four months in a row before rebounding in the final month of the year.

Cheaper gas prices, slowing inflation, a stock-market rally and a strong labor market have given consumers more confidence in the economy.

Also read: Consumer confidence climbs to five-month high

Key details: A gauge that measures what consumers think about the current state of the economy dipped to 73.3 from a preliminary 74.0.

A measurement of expectations for the next six months, however, climbed to 67.4 from an initial 66.4. That’s also a five-month high.

Americans think inflation will average 3.1% in the next year, down sharply from expectations of 4.5% in November. The current rate of inflation is 3.1%.

Big picture: The economy has slowed after a surprising burst of growth in the fall. Higher interest rates are likely to restrain growth early in the new year.

Market reaction: The Dow Jones Industrial Average
DJIA,
+0.30%

and the S&P 500
SPX,
+0.50%

rose in Friday trading.

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