Consumer Sentiment Fell 2.2% in November, But Remains High

Ann Arbor, MI, November 22, 2017-Consumer sentiment fell 2.2% to 98.5 in November, from October’s 100.7 rate, according to final results from the University of Michigan.

November’s rate represents a 5.0% increase year over year.

“Consumer sentiment narrowed its loss from mid-month, although it was still slightly below last month's decade peak,” according to Survey of Consumers chief economist Richard Curtin. “Overall, the Sentiment Index has remained largely unchanged since the start of the year at the highest levels since 2004. What has changed recently is the degree of certainty with which consumers hold their economic expectations. In contrast to the media buzz about approaching cyclical peaks and an aging expansion, with the implication of greater uncertainty about future economic trends, consumers have voiced greater certainty about their expectations for income, employment, and inflation. Inflation expectations have shown the smallest dispersion on record, and increased certainty about future income and job prospects has become a key factor that has supported discretionary purchases. To be sure, caution is warranted given that the current expansion will soon be the second longest expansion since the mid-1800s, as well as the potential for significant changes in tax policies and the new Fed leadership and Board members. Interestingly, the data indicate that neither changes in fiscal nor monetary policies have yet had any noticeable impact on consumer expectations. Overall, the data signal an expected gain of 2.7% in real consumption expenditures in 2018, and more importantly for retailers, the best runup to the holiday shopping season in a decade.”