With consumers more optimistic about the future than previously estimated, the University of Michigan released a report on Friday showing a much bigger than expected upward revision to its reading on U.S. consumer sentiment in the month of November.
The report said the consumer sentiment index for November was upwardly revised to 96.8 from the preliminary reading of 95.7. The revised reading is well above the final October reading of 95.5.
The stronger than previously estimated improvement in consumer sentiment came as the index of consumer expectations for November was upwardly revised to 87.3 from 85.9. The index came in at 84.2 in October.
The current economic conditions index was also upwardly revised to 111.6 from 110.9 but is still down from 113.2 in the previous month.
Surveys of Consumers chief economist, Richard Curtin noted the level of optimism seen over the past three years is second only to the period from January 1998 to December 2000.
“Although impeachment proceedings occurred in both time periods, the current period is distinctive for the much sharper partisan divisions in the economic expectations among consumers as well as the wide gap in optimism between consumers and business firms,” Curtin said.
“One side anticipates a recession, while the other side expects an uninterrupted expansion in the year ahead,” he added. “To be sure, there is ample reason for both optimism as well as pessimism, but not the extreme differences voiced by these groups.”
Curtin predicted personal spending will be energized by consumers’ record favorable evaluations of their personal financial situations but noted there are significant risks from potential negative shocks, associated with tariffs, impeachment, the presidential election, global growth, and geopolitical events.
“It has been differences in how these risks have been assessed that underlie the partisan differences among consumers and the gap in sentiment between the business and consumer sectors,” Curtin said.
With regard to the inflation outlook, one-year inflation expectations were unchanged from the previous month at 2.5 percent, but five-year inflation expectations rose to 2.5 percent in November from 2.3 percent in October.
The material has been provided by InstaForex Company – www.instaforex.com