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American consumers are a little less gloomy about the economy, but high prices are still what weighs on them most. The University of Michigan’s preliminary November consumer sentiment index rose to 51.0 from 48.0 in October, beating the 48.0 economists polled by Reuters expected.
The survey’s one-year inflation expectation fell to 4.3% from 4.7%, the lowest since August. The five-year outlook slipped to 3.4% from 3.5%. The one-year reading remains above February’s 3.4%.
What it means for your wallet
Prices are the story. About 57% of those surveyed volunteered, without being prompted, that high prices have eroded their living standards, the most since May and up from 46% in February. Concern about an AI stock bubble showed up in comments too, but cost-of-living worries outweighed it across the population.
The mood improved most for lower- and middle-wealth households. Sentiment fell 5% among households with the largest stock portfolios after a rough stretch in the stock market. Even with the gain, sentiment is 10% below February and level with a year ago, when it also stood at 51.0.
Why the inflation numbers matter: when households expect prices to keep climbing, they tend to push for higher pay and change what they buy, and the Federal Reserve watches those expectations when it weighs interest rates, which feed into mortgage, car loan and credit card costs.
The survey’s interviews ran Oct. 20 to Nov. 2, before Election Day and before Thursday’s stock market selloff, so the results reflect neither. The final November reading is due Nov. 20.
JBizNews Desk | New York
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