University of Michigan November preliminary consumer sentiment rises to 51.0 vs. 48.0 expected
Key Takeaways
- •The preliminary University of Michigan consumer sentiment index rose to 51.0 in November, beating the 48.0 consensus and improving from a prior reading of 46.3.
- •One-year inflation expectations fell to 4.3% from 4.7%, and five-to-10-year expectations declined to 3.4% from 3.5%, a drop ForexLive said the Federal Reserve will be pleased with.
- •Both sub-indexes exceeded forecasts, with current economic conditions at 51.0 versus 48.0 expected and consumer expectations at 50.9 versus 49.5 expected.
- •Because the preliminary release uses a smaller sample, its figures can be meaningfully revised when the final November reading is published near the end of the month.
- •The survey moved from telephone to online interviews in 2024, complicating historical comparisons, and its responses have become increasingly partisan, limiting its reliability as an economic signal according to ForexLive.
The University of Michigan's preliminary Index of Consumer Sentiment rose to 51.0 in November, above the 48.0 expected and up from a prior reading of 46.3, according to ForexLive.
Key figures from the preliminary release:
- Current economic conditions: 51.0 vs 48.0 expected
- Consumer expectations: 50.9 vs 49.5 expected
- One-year inflation expectations: 4.3% vs 4.7% prior
- Five-year inflation expectations: 3.4% vs 3.5% prior
The University of Michigan's Surveys of Consumers is among the oldest measures of US household sentiment, but it has lost lustre in financial markets because its readings do not always correspond with spending. The preliminary reading is released at 10 a.m. ET in the first half of each month, based on interviews conducted over the preceding weeks. A final reading incorporating the full sample follows near the end of the month. The preliminary figure sometimes draws a market reaction as the first look at the month.
The headline index is built from questions about personal finances, business conditions and whether it is a good time to buy big-ticket items. It is indexed to 100 in early 1966. The survey splits into two sub-indexes—current economic conditions and consumer expectations—and the expectations measure is a component of the Conference Board's Leading Economic Index.
Inflation expectations have lately been the most market-sensitive part of the release, and ForexLive noted the Federal Reserve will be pleased with the dip in this report. Respondents estimate price changes over the next year and over the next five to 10 years. The Fed watches the longer-run measure as a signal of whether inflation expectations remain anchored; sharp moves can shift Treasury yields and rate pricing. Because the preliminary sample is smaller, these figures can be meaningfully revised in the final release. That makes the final November reading, due near the end of the month, the next checkpoint for whether the improvement in sentiment and the easing of inflation expectations hold.
The survey moved from telephone to online interviews in 2024, complicating comparisons with its long history. Responses have also become increasingly partisan, with sentiment swinging sharply depending on which party controls the White House.
Sentiment readings do not always match spending, and households often keep buying even when they say they are pessimistic. Still, the survey offers a timely read on how consumers are reacting to inflation, tariffs, gasoline prices, the job market and stock prices. ForexLive argued the readings were a good indicator of what was coming in the midterms, rather than what was coming in the economy.
