November US UMich prelim consumer sentiment 51.0 vs 48.0 expected

• Prior was 46.3
• Current conditions 51.0 vs 48.0 expected
• Expectations 50.9 vs 49.5 expected
• One-year inflation 4.3 vs 4.7% prior
• Five-year inflation 3.4 vs 3.5% prior

The University of Michigan’s Surveys of Consumers is one of the oldest measures of US household sentiment but it's lost its lustre in financial markets due to readings that don't correspond with spending. The preliminary reading is released at 10 am ET in the first half of each month, based on interviews conducted over the preceding weeks. A final reading incorporating the full sample follows near the end of the month. The preliminary figure sometimes draws a market reaction because it’s the first look at the month.

The headline Index of Consumer Sentiment is built from questions about personal finances, business conditions and whether it’s a good time to buy big-ticket items. It’s indexed to 100 in early 1966. The survey splits into two sub-indexes, current economic conditions and consumer expectations. The expectations measure is a component of the Conference Board’s Leading Economic Index.

Inflation expectations are lately the most market-sensitive part of the release and the Fed will be pleased with the dip in today's report. Respondents estimate price changes over the next year and over the next five to 10 years. The Federal Reserve watches the longer-run measure as a signal of whether inflation expectations remain anchored, and sharp moves can shift Treasury yields and rate pricing. Because the preliminary sample is smaller, these figures can be revised meaningfully in the final release.

The survey moved from telephone to online interviews in 2024, complicating comparisons with its long history. Responses have also become increasingly partisan, with sentiment swinging sharply depending on which party controls the White House.

Sentiment readings don’t always match spending, and households often keep buying even when they say they’re pessimistic. Still, the survey provides a timely read on how consumers are reacting to inflation, tariffs, gasoline prices, the job market and stock prices. I'd argue they were a good indicator of what was coming in the midterms, rather than what is/was coming in the economy.