Consumer Sentiment Rises 6.3% to 51.0 as Inflation Expectations Ease, but Prices Still Weigh

U.S. consumer sentiment rose 6.3% to 51.0 in the University of Michigan's preliminary November reading, up from 48.0 in October and above the 48.0 economists expected. Year-ahead inflation expectations eased to 4.3% from 4.7%, but they remain well above February's 3.4%. The survey was released Nov. 6.

The November reading

Economists had expected the index at 48.0 and the expectations index at 49.5. October's 48.0 is the final reading, revised up from a preliminary 46.3. Despite the rebound, sentiment remains about 10% below February, when the index was 56.6.

Inflation expectations ease but stay high

• Year ahead. Expectations fell to 4.3% from 4.7%, but remain 0.9 percentage point above February's 3.4%.
• Long run. Expectations eased to 3.4% from 3.5%, still above their 2024 range of 2.8% to 3.2%.

Cost-of-living pressure

About 57% of consumers said high prices are hurting their living standards, up from 46% in February, according to the survey. Consumers increasingly see inflation as a greater economic risk than unemployment.

A divide by wealth and by markets

• Lower- and middle-wealth households. Sentiment improved among lower- and middle-wealth households, primarily independents.
• Largest stock portfolios. Sentiment fell 5% among consumers with the largest stock portfolios.
• AI bubble worries. Some respondents expressed concern about a potential AI bubble. Technology and AI-linked shares fell sharply on Thursday. See our market recap.

What to watch

• Final reading. The final November figures, due later this month, will show whether the rebound holds.
• Inflation expectations. Whether year-ahead expectations keep falling from 4.3% toward February's 3.4%.
• Stock owners. Whether confidence among the largest stock holders keeps falling if technology shares stay under pressure.
• Living standards. Whether the 57% of consumers citing high prices falls back toward February's 46%.
• Related coverage. See our Week Ahead, Oracle's New Mexico data center and TeraWulf and Google's backstop.

Sources: Survey figures are from the University of Michigan Surveys of Consumers, with forecasts and prior readings from InvestingLive and Trading Economics. February and 2024 comparisons are from the university's earlier releases, and changes marked as percentages are calculated from the reported index levels. This article is informational only and is not investment advice.