U.S. Consumer Sentiment Pulled Back in November

A measure of U.S. consumer sentiment pulled back in November from a 13-year high, signaling solid economic optimism headed into the holiday shopping season.

The University of Michigan on Wednesday said its consumer-sentiment index was 98.5 in November, up from a preliminary reading of 97.8. It was down from October’s 100.7, which was its highest level since January 2004.

Economists surveyed by The Wall Street Journal had expected a final November reading of 98.0.

Gauges of business and household confidence jumped following last year’s presidential election and remained high this year. Economic growth has been solid for much of 2017 and the unemployment rate fell in October to 4.1%, its lowest level in nearly 17 years. The stock market also has hit new records.

“In contrast to the media buzz about approaching cyclical peaks and an aging expansion, with the implication of greater uncertainty about future economic trends, consumers have voiced greater certainty about their expectations for income, employment and inflation,” said Richard Curtin, the Michigan survey’s chief economist.

An index tracking current economic conditions fell to 113.5 in November from 116.5 in October. A separate index tracking expectations about the future was down to 88.9 from October’s 90.5. Both measures, however, were up this month compared with a year earlier.

Wednesday’s report contained mixed signals on household expectations for future inflation. In November, consumers said they expected 2.4% annual inflation in five to 10 years, ticking down from 2.5% the prior three months. But the expectation for inflation over the next year ticked up to 2.5% from 2.4% in October.

The Federal Reserve aims for 2% annual inflation as measured by the Commerce Department’s personal-consumption expenditures price index, but actual price growth has undershot that target for most of the past half-decade. The PCE index rose 1.6% in September from a year earlier, while prices excluding food and energy were up a more modest 1.3%.

The Fed is widely expected to raise short-term interest rates when officials next gather in mid-December. But some policy makers have increasingly expressed concern about the persistence of sluggish price growth this year.

“We expect [inflation] to move back up over the next year or two, but I will say I’m very uncertain about this,” Fed Chairwoman Janet Yellen said Tuesday at New York University’s Stern School of Business.
Source: Dow Jones

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