Consumers are feeling slightly better about the direction of the economy

Consumers are becoming more confident about the state of the economy, despite recession fears, soaring interest rates and continued high prices, according to the latest consumer survey from the University of Michigan.

The survey’s consumer sentiment index measured 59.1 in December, up from the final reading of 56.8 in November.

Economists were expecting a reading of 56.9, according to consensus estimates on Refinitiv.

The 2.3 point increase in the December report is the best one-month improvement in the reading since August, when it experienced a 6.7 point jump. The November report had shown a 3.1 point decline in consumer sentiment from the previous month.

Still, the reading continues to show a much gloomier outlook than a year ago, when the survey stood at 70.6.

“Throughout the survey, concerns over high prices — which remain high relative to just prior to this current inflationary episode — have eased modestly,” said Joanne Hsu, the survey’s director.

That’s in keeping with what is happening with prices overall, as the pace of price increases has been declining.

Some prices, particularly gasoline, have actually fallen and are now below where they stood a year ago. Gas prices typically have an outsized influence on consumers’ thinking about inflation since the prices are so readily apparent at every gas station.

Overall, prices remain high by historic standards, and that has led the Federal Reserve to increase interest rates at a historic pace, which itself has put stress both on consumers and businesses, some of which have started to trim jobs as a result.

Despite all of that, the survey showed wide gains in confidence.

“Gains in the sentiment index were seen across multiple demographic groups, with particularly large increases for higher-income families and those with larger stock holdings, supported by recent rises in financial markets,” said Hsu.