Consumer confidence bounced back in December to the highest level since April, reversing consecutive declines in October and November as Americans grew more upbeat on the economy and jobs.

The Conference Board's consumer confidence index stood at 108.3 in December, up from 101.4 the prior month, while consumers' view on business conditions and the prospects for income both rose as well.

Inflation expectations fell in December to their lowest level since last September, according to the Conference Board, as gas prices dropped.

Gas prices have plunged nearly 40% to $3.11 Wednesday after hitting a record high in June, according to AAA.

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"Inflation expectations retreated in December to their lowest level since September 2021, with recent declines in gas prices a major impetus," said Lynn Franco, senior director of economic indicators at The Conference Board.

"Vacation intentions improved but plans to purchase homes and big-ticket appliances cooled further. This shift in consumers’ preference from big-ticket items to services will continue in 2023, as will headwinds from inflation and interest rate hikes."

Inflation expectations came down this month even as prices remain high for everything from groceries to haircuts – something the Federal Reserve is watching closely as the central bank tries to ward off higher inflation becoming entrenched in the minds of consumers.

Longer-term inflation expectations haven’t leaped, though the Fed is watching this measure closely as high inflation persists.

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Consumer confidence and expectations for the economy have picked up in recent months, though still remain below pre-pandemic levels. (Source: The Conference Board)