The University of Michigan’s preliminary index rose to 51.0 from 48.0 in October. High prices remain a concern for households.
US consumer sentiment improved in early November as households took a better view of current conditions and lowered their expectations for inflation. The University of Michigan’s preliminary index rose three points to 51.0 in a release on Friday, matching its level of a year earlier.
The interviews ran from 20 October to 2 November and ended before the US midterm elections. The figures offer a snapshot of household views going into the vote. The university is due to publish its final November reading on 20 November.
Current conditions led the improvement
The index of current economic conditions increased to 51.0 from 46.7 in October, a gain of 4.3 points. The index of consumer expectations, which covers the outlook, rose 2.1 points to 50.9. Both readings remained slightly below their levels a year earlier.
Survey director Joanne Hsu said the gains were concentrated primarily among political independents. Respondents reported modest improvements in their expectations for personal finances and business conditions, and sentiment picked up among households with lower and middle levels of wealth.
Price pressures still weigh on households
Respondents expected prices to rise 4.3% over the next year, down from 4.7% in October. Their longer-run inflation expectation fell to 3.4% from 3.5%. The one-year measure was the lowest since August and remained above the 3.4% recorded in February.
About 57% of respondents mentioned without prompting that high prices had eroded their standard of living, up from 46% in February. The answers distinguish two pressures on budgets. Households expect prices to rise more slowly than they did a month ago, while the prices they already pay continue to strain purchasing power.
Stock-market worries divided respondents
Sentiment fell 5% among households with the largest stock portfolios. Hsu pointed to recent turbulence in financial markets and said some comments reflected growing concern about a possible bubble in artificial intelligence investments. Living costs remained the more widespread concern.
The gains in both components of the index give the final November survey a clear point of comparison. It will show whether the improvement in views of current conditions held as the month progressed and interviews extended beyond election day.
Sources
University of Michigan Surveys of Consumers — preliminary November results
ABA Banking Journal — current conditions and consumer expectations
