US Consumer Sentiment Falls on Inflation, Rate-Hike Fears

US Consumer Sentiment Falls on Inflation, Rate-Hike Fears

US Consumer Sentiment Falls on Inflation, Rate-Hike Fears


  • US Consumers remain optimistic about employment and the economy.

US consumer sentiment in fell on expectations that inflation and interest rates will rise, according to a University of Michigan report Friday.

Highlights of Michigan Sentiment Indicator (November, preliminary)

  • Sentiment index dropped to 97.8 (est. 100.8) from 100.7
  • Current conditions gauge, which measures Americans’ perceptions of their finances, fell to 113.6 from 116.5
  • Expectations measure decreased to 87.6 from 90.5

Key Takeaways from the MSI report

Even with the decline, sentiment was the 2nd-highest since January, reinforcing other reports that Americans remain Optimistic about employment and the economy.

Anticipation of a pickup in inflation and higher interest rates weighed on the gauge, although a record number of Americans “spontaneously mentioned” an improving jobs market, the report said. Favorable references to more jobs and less unemployment tied the highest level ever recorded, in 1984 and 2012.

The results indicate consumers are evaluating whether income gains would be enough to outpace the expected increase in borrowing costs for home and car purchases, according to the report.

Official’s Views

“While the majority judged current conditions in the economy favorably and consumers anticipated continued growth on balance, consumers judged the outlook less satisfactory, and were equally divided about whether the expansion would last another five years,” Richard Curtin, director of the University of Michigan consumer survey, said in a statement.

“We’ll have a pretty good holiday season, and I think retail sales will be fairly good,” he said in a conference call after publication of the report. “Income, jobs and wealth are moving in the right direction, and that should make a favorable Christmas season for all concerned.”

Other Details

  • Consumers saw the inflation rate in the next year at 2.6%, up from 2.4% the prior month
  • Consumers expected an annual income gain of 2.1% for the 2nd month running, the best 2 year-period average since Y 2008
  • Inflation rate over next 5 to 10 years held at 2.5%
  • 6 in 10 consumers saw stock-market gains as likely in the year ahead
  • References to low mortgage rates fell to 32% in early November from 40% last month

Friday, the US major stock market indexes finished at: DJIA -39.73 at 23422.21, NAS Comp +0.89 at 6750.95, S&P 500 -2.32 at 2582.28

Volume: Trade on the NYSE came in at: 853-M/shares exchanged

  • NAS Comp +25.4% YTD
  • DJIA +18.5% YTD
  • S&P 500 +15.3% YTD
  • Russell 2000 +8.7% YTD
HeffX-LTN Analysis for DIA: Overall Short Intermediate Long
Bullish (0.38) Bullish (0.29) Bullish (0.42) Bullish (0.42)
HeffXL-LTN Analysis for SPY: Overall Short Intermediate Long
Bullish (0.33) Bullish (0.30) Bullish (0.35) Bullish (0.33)
HeffX-LTN Analysis for QQQ: Overall Short Intermediate Long
Bullish (0.46) Bullish (0.48) Bullish (0.37) Very Bullish (0.53)
HeffX-LTN Analysis for VXX: Overall Short Intermediate Long
Bearish (-0.47) Bearish (-0.49) Bearish (-0.26) Very Bearish (-0.67)

Have a terrific weekend

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