Maybe inflation is low to nonexistent, and maybe many retailers are suffering from weak sales, but don’t bother with that when it comes to consumer sentiment. The University of Michigan has released its preliminary view for consumer sentiment in November 2015. Sentiment is improving on most fronts.
Friday’s report showed that the broad Index of Consumer Sentiment rose to 93.1 in November, up from 90.0 in October and from 88.8 a year ago. Bloomberg was calling for a consensus reading of only 92.0, with a range of 89.0 to 94.0.
The subindex readings were also both higher. Current Economic Conditions was up at 104.8, versus 102.3 in October and 102.7 a year ago. Things are looking better ahead as well as the Index of Consumer Expectations rose to 85.6 in November, up from 82.1 in October and higher than the 79.9 a year earlier.
To explain the higher boost in consumer sentiment, the official statement from the report said:
Confidence rose in early November mainly due to a stronger outlook for the domestic economy. Overall, the most recent confidence reading was equal to the average during the first ten months of 2015, and higher than any year since 2004. Two trends dominated the early November data: consumers anticipated somewhat larger income increases during the year ahead as well as expected a somewhat lower inflation rate. This meant that consumers held the most favorable inflation-adjusted income expectations since 2007. Moreover, the somewhat larger gains were anticipated by lower income households. Buying plans for large discretionary purchases improved, especially for vehicles. Overall, the data indicate an expected rate of growth in personal consumption expenditures of 2.9% in 2016.
As a reminder, the preliminary report from the middle of each month gets revised on the last Friday of the month. The general trends usually hold up, but the polling group is much narrower than the broader consumer confidence reading issued by the Conference Board. Still, this is one of the first economic readings deemed to be real-time each month.