Disposable personal income — personal income after taxes — rose 7.8% in the 12 months through November, consumer spending rose 7.1% and inflation continued to decline. Consumers may be starting to believe inflation is under control and the economy is improving. 
The inflation benchmark the Federal Reserve references in policy pronouncements, the Personal Consumption Expenditure Deflator (PCED), decreased by one-tenth of 1% in November. This reflected lower prices for gasoline. The PCED price index, compared to 12-months earlier, rose by 2.6%. That’s coming closer to the 2% inflation target set by the Federal Reserve. 
Consumers have remained glum about the outlook of the economy, despite a steady stream of statistics throughout 2023 indicating the economy was growing better than expected and that inflation was coming under control. However, that may be starting to change. The consumer sentiment index in November rose 14%, reversing all declines from the previous four months. All five components of the sentiment index rose, according to the University of Michigan, which has only occurred in 10% of monthly readings since 1978. “Expected business conditions surged over 25% for both the short and long run,” according to a UM release. “All age, income, education, geographic, and political identification groups saw gains in sentiment this month.” 
The Standard & Poor’s 500 stock index closed Friday at 4754.63, up +0.17% from Thursday and + 0.75% from a week ago, extending its winning streak for an eighth week. The index is up +112.51% from the March 23, 2020 bear market low and only -0.87% from its January 3, 2022, all-time high.
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