The Surveys of Consumers is a rotating panel survey at the University of Michigan Institute for Social Research. It is based on a nationally representative sample that gives each household in the coterminous U.S. an equal probability of being selected. The minimum monthly change required for significance at the 95% level in the Sentiment Index is 4.8 points; for the Current and Expectations Index, the minimum is 6 points.
Sentiment for consumers mentioning food were substantially higher than for those who did not, suggesting that high prices of food continue to weigh on a sizable share of consumers. Consumer concerns over high interest rates for durable goods reached their lowest levels in two years, which will likely provide some support for consumers’ willingness to make these purchases in the months ahead. The share of consumers spontaneously mentioning the negative effect of high interest rates or tight credit on buying conditions for large purchases fell this month.
Inflation Fears Worsen
Adam Hayes, Ph.D., CFA, is a financial writer with 15+ oanda- a foreign exchange brokerage review years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master’s in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.
This indicator is important to retailers, economists, and investors, and its rise and fall has historically helped predict economic expansions and contractions. “The expectations index surged for Republicans and fell for Democrats this month, a reflection of the two groups’ incongruous views of how Trump’s policies will influence the economy,” Hsu wrote. Consumers reported stronger incomes in November, and they expect further income gains in the year ahead. In the two years prior to the pandemic, year-ahead inflation expectations ranged between 2.3% and 3.0%. Consumer inflation expectations are an important gauge for Federal Reserve officials, who closely watch survey results for indications if consumer behavior will lead to higher prices.
“Overall, the stability of national sentiment this month obscures discordant partisan patterns,” Surveys of Consumers Director Joanne Hsu said in a statement. “In a mirror image of November 2020, the expectations index surged for Republicans and fell for Democrats this month, a reflection of the two groups’ incongruous views of how Trump’s policies will influence the economy.” Consumer sentiment is a statistical measurement of the overall health of the economy as determined by consumer opinion. Year-ahead inflation expectation declined to 2.6%, down a tick from the prior month, but inflation expectations for five years out increased to 3.2%, showing increasing uncertainty over long-run prices.
How Investors Can Use the CSI
Fed officials have said repeatedly that the central bank won’t be in a position to consider cuts to the benchmark interest rate until inflation is under control. Consumer sentiment fell sharply in May, bringing the Michigan Consumer Sentiment Index to its lowest how to turn off safeprice level in six months. Long-run inflation expectations, on the other hand, rose to 3.2 percent in November from 3.0 percent in October. She added, “The expectations index surged for Republicans and fell for Democrats this month, a reflection of the two groups’ incongruous views of how Trump’s policies will influence the economy.” The final reading was also lower than the forecast of 73.5 by economists surveyed by The Wall Street Journal and Dow Jones Newswires.
President Ono’s Monthly Message – October 2024
- (RTTNews) – Consumer sentiment in the U.S. improved less than previously estimated in the month of November, according to revised data released by the University of Michigan on Friday.
- In contrast, in June 2022, 79% of consumers expected challenging times ahead for the economy.
- The yield of 10-year Treasuries increased from 3.70% in early October to 4.42%, while the yield of 30-year Treasuries grew from 4.05% to 4.60%.
- This growth, in turn, leads to greater interest from foreign investors, which results in the increased value of the dollar against other foreign currencies.
- Overall, the share of consumers expecting a Harris presidency fell from 63% last month to 57% in October.
The first major consumer sentiment since the presidential election showed that people felt better about the economy, but the bump wasn’t as big as economists were expecting. More consumers anticipate a strengthening economy in the latest survey, continuing an upward trend that began in April 2024. They expect labor market conditions to remain strong; less than one-third of consumers expect unemployment to increase in the year ahead, down from 38% a year ago. “While consumers had been reserving judgment for the past few months, they now perceive negative developments on a number of dimensions. They expressed worries that inflation, unemployment and interest rates may all be moving in an unfavorable direction in the year ahead,” said survey director Joanne Hsu.
Furthermore, consumers saw favorable developments throughout the economy as well, Hsu said. Overall, consumers perceived few developments, positive or negative, in the state of the economy since the start of the new year. Several major economic indices and indicators can help investors and economists predict where the economy is headed. The Consumer Price Index (CPI), the Producer Price Index (PPI), and the Gross Domestic Product (GDP) all forecast the future strength of the U.S. economy. The Michigan Consumer Sentiment Index is another key indicator designed to illustrate the average U.S. consumer’s confidence level.
The Current Index rose to 64.9, up from 63.3 in September and below last October’s 70.6. The Expectations Index fell to 74.1, down from 74.4 in September and above last October’s 59.3. Vladimir is an independent trader and analyst with over 10 years of experience in the financial markets.
Whether the sentiment is optimistic, pessimistic, or neutral, the survey signals information about near-term consumer spending plans. The survey also showed a change in sentiment on inflation, which many economists Streaming stocks think will move higher if Trump enacts the tariffs he proposed during the campaign. Federal Reserve officials closely follow consumer inflation expectations as they can help influence the path of prices. While higher-income households expect particularly strong income growth in the coming year, consumers overall remain extremely frustrated by the persistence of high prices, Hsu said.
