U.S. Consumer Sentiment Weakens as Inflation Accelerate — University of Michigan

By Ed Frankl

Sentiment among U.S. consumers weakened in November, albeit coming in better than preliminary estimates, amid rising concerns that easing inflation could reverse.

The final reading of the consumer sentiment index dipped to 61.3 in November from 63.8 in October, according to data from a survey carried out by the University of Michigan released Wednesday.

Economists polled by The Wall Street Journal had expected the indicator to be at 60.6, a little higher than the preliminary estimate of 60.4 made in mid-November. It was the fourth weaker reading in as many months.

November's reading reflects conflicting factors, some of which improved while others worsened, according to survey director Joanne Hsu.

"More-favorable current assessments and expectations of personal finances were offset by a notable deterioration in expected business conditions," she said.

Long-run business conditions dipped by 15% to their lowest level since July 2022, she added, with younger and middle-aged consumers showing deteriorating economic attitudes in November. For those aged 55 and older, sentiment improved, the data said.

The survey also showed consumers' expectations of inflation accelerated in November, with respondents expecting inflation to average 4.5% over the next 12 months and 3.2% in the next five years, compared with 4.2% and 3.0%, respectively, when asked in October. The five-year reading is the highest since 2011.

The higher inflation expectations, data for which is keenly watched by Federal Reserve policymakers, come despite continued easing inflation in the U.S. On-year consumer prices rose 3.2% in October.

"Consumers appear worried that the softening of inflation could reverse in the months and years ahead," Hsu said.

Write to Ed Frankl at edward.frankl@wsj.com

(END) Dow Jones Newswires

November 22, 2023 10:38 ET (15:38 GMT)

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