Despite a sluggish economy and lingering labor market issues, consumer sentiment rebounded from its worst level in nearly two years. According to Thomson Reuters/University of Michigan’s final reading, consumer sentiment increased to 75.1 in November, compared to a preliminary reading of only 72.0.
The results were better than expected. On average, economists expected a rise in consumer sentiment to 73.5. Prior to November’s reading, the consumer sentiment index missed expectations for two consecutive months, and posted declines for three months in a row.
During the last recession, the index averaged slightly above 64. In the five years before the financial crisis, it averaged almost 90. Consumer sentiment is one of the most popular measures of how Americans rate financial conditions and attitudes about the economy. The University of Michigan’s Consumer Survey Center questions 500 households each month for the index.
However, the recent rise was mostly boosted by the optimism from wealthier Americans. “While rising stock prices and low interest rates will favor holiday sales of upper-end consumers, lower income households were still more concerned about job gains,” survey director Richard Curtin said in a statement.
Current economic conditions, which measure whether Americans think it is a good time to make large investments, fell from 89.9 in October to 88.0 in November, below slightly estimates calling for 89.0. On the positive, consumer expectations increased to 66.8 from only 62.5 in October. Meanwhile, the one-year inflation expectation fell to 2.9 percent from 3.1 percent, the lowest level since October 2010. The five-to-10-year inflation outlook remained steady at 2.9 percent.
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