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First Cut: Final November Consumer Sentiment Index near average for 2019 to-date

The final University of Michigan Consumer Sentiment Index was revised up to 96.1 (previously 95.7). It was slightly above the final 95.5 for October and not materially different from the average for the first 11 months of 2019 of 95.6. Consumers remain confident overall even with the negatives in the new cycle primarily related to politics. The labor market has yet to deteriorate in spite of slower growth, interest rates remain low, and upward price pressures are absent. Incomes gains are steady, if unspectacular.

The index for current conditions was revised higher to 111.6 in November (previously 110.9) and the six month outlook was also improved to 87.3 from the preliminary report (previously 85.9). The resilience in the economy has kept confidence solid both in the present and near future.

Inflation expectations remained low, but anchored in November. The 1-year measures was 2.5%, unrevised from the preliminary report and the same as the 2.5% in October. This is at the low end of the range of recent readings but not enough to suggest that consumers expect prices to decline further in the near term. The 5-year measure was revised up a tenth to 2.5% for November and was two-tenths higher than the 2.3% in October. This brings expectations for the medium term — which is of more concern to Fed policymakers — back toward the upper of the range of recent readings. Here, too, there is no evidence that inflation expectations are in danger of losing their tether.

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