Consumer Sentiment Falls 1.1% in November

Ann Arbor, MI, November 21, 2018-Consumer sentiment fell 1.1% to 97.5 in November, from October’s 98.6 rate, according to final results from the University of Michigan Survey of Consumers.

This amounts to a 1.0% drop year over year. 

“Consumer sentiment has remained largely unchanged at very favorable levels during 2018, with the November reading nearly at the center of the eleven month range from 95.7 to 101.4,” according to Richard Curtin, Survey of Consumers chief economist. “Although the data recorded a decline of 2.8 Index points following the election, the drop was related more to income than political party: among those with incomes in the bottom third, the Sentiment Index rose by 10.4 points and fell by 6.6 points among those in the top third of the income distribution. In contrast, the Sentiment Index remained unchanged among Democrats and Republicans prior to and following the election. Consumers' interest rate expectations have always traced the outlines of economic cycles (see the chart). As expansions lengthen, the number of consumers who expect interest rate increases gradually increases. After some threshold is reached, however, consumers in large numbers abruptly anticipate future declines in interest rates. Sales declines are then accelerated not only by falling job and income prospects but also from the expectation of falling interest rates in the future. While there is no reason to anticipate a sudden change in interest rate expectations in the next few months, it is still an important task for the Fed to avoid hitting the threshold that causes widespread postponement of purchases.”