The University of Michigan’s preliminary Consumer Sentiment Index for November barely budged at 95.7 from 95.5 in the final October report. Consumers remained focused on the solid labor market and prospects for improvements in the future.
The index for current conditions dipped to 110.9 in November after 113.2 in October. The decline isn’t significant as it represents a reset to the underlying trend after a brief burst higher in the prior month. The index for six-month expectations was up to 84.2 in November after 85.9 in October and was up for a fourth month in a row after plunging from 90.5 in July to 79.9 in August. Consumers may be shrugging off the negative news cycle regarding the economy and political events as talk of recession so far is just that and the scandals surrounding the Trump administration are chronic while remaining unresolved.
While off the peaks seen earlier this year, consumers remain optimistic. Whether this translates into a strong spending over the holiday period remains to be seen.
Inflation expectations were not much different in early November from October. The 1-year inflation expectation measure was unchanged at 2.5%. While on the low side of the range of reading in the past year, it does not indicate that inflation expectations are unanchored. The same is true of the 5-year inflation measure which ticked up a tenth to 2.4% at the start of November.
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