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Uni Michigan consumer sentiment index ticks lower in November

By Michele Maatouk

Date: Friday 09 Nov 2018

(Sharecast News) - US consumer sentiment deteriorated less than expected in November, according to a preliminary reading from the University of Michigan.
The consumer sentiment index printed at 98.3 from 98.6 in October and 98.5 in November last year, beating expectations for a bigger drop to 98.0.

The current economic conditions index ticked up to 113.2 in November from 113.1 the month before and 113.5 in November 2017.

Meanwhile, the index of consumer expectations slipped to 88.7 this month from 89.3 in October and 88.9 last November.

Surveys of Consumers chief economist Richard Curtin: "Consumer sentiment remained virtually unchanged in early November from its October reading. Importantly, interviewing went through Wednesday night so there was only a one-day overlap after the mid-term election results were known by consumers. Those few cases held expectations that were identical with the data collected earlier in the month, which is not so surprising given that the split between the House and Senate was widely anticipated.

"The unchanged data meant that the sentiment index remained higher thus far in 2018 (98.4) than in any prior year since 2000. The stability of consumer sentiment at high levels acts to mask some important underlying shifts. Income expectations have improved and consumers anticipate continued robust growth in employment, but consumers also anticipate rising inflation and higher interest rates. While these positive and negative changes act to offset each other in the aggregate, younger consumers have benefited most from more positive income trends and older consumers are more likely to complain about the erosion of their living standards due to rising prices; rising interest rates weigh heavily on younger consumers who are more likely to borrow, and older consumers are more likely to benefit from higher returns on their savings."

Michael Pearce, senior US economist at Capital Economics, said the still-elevated level of consumer confidence suggests that consumers largely shrugged off the recent volatility in equity markets, and points to consumption growth remaining strong over the coming months.

"The cut-off date for the survey was the 7th November, so it is too early to tell if the midterms results have had any impact. For what it's worth though, the expectations index fell among both Republicans and Democrats alike this month.

"Consumer confidence has not been a great guide to consumption growth recently, but at its current level is consistent with consumption growth of around 5% annualised. Elsewhere, expected inflation five years ahead rebounded to 2.6%, from 2.4%, which brings it closer in line with its historical average. Overall, another strong report which adds to the case for the Fed to continue gradually raising interest rates."

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