The University of Michigan consumer sentiment index has a final reading of 61.3 for November, an upward revision from 60.4 in the preliminary report, but down from 63.8 in October. The final November index is above the consensus of 60.5 in the Econoday survey of forecasters. The index remains the lowest since 59.2 in May 2023. Overall consumer sentiment remains low due to concerns about the economic outlook at home and stubborn inflation, higher financing costs that put big-ticket purchases out of reach for some households, and geopolitical worries.

The index for current conditions is revised up to 68.3 in the final report after the preliminary 65.7, and is down from 68.3 in October. The upward revision likely reflects the further declines in energy prices, particularly for gasoline. The expectations index was essentially unrevised at 56.8 in the final report after 56.9 in the preliminary report, and down from 59.3 in October.

The final 1-year inflation expectations measure is revised up a tenth to 4.5 percent from the preliminary report and is the highest since 4.9 percent in November 2022. Despite lower gasoline prices, other household costs are on the rise. If near-term inflation expectations are below the recent peak of 5.4 percent in March and April 2022, the increase in the last two months suggests that consumers are no longer so optimistic that inflation will continue to fall. The 5-year inflation expectations measure is unrevised at a final 3.2 percent in November, up from 3.0 percent in October and the highest since 3.2 percent in March 2011. Inflation expectations for the longer term have not come unanchored, but do suggest that consumers are seeing less chance for further moderation in upward price pressures over time.

Consumer sentiment is expected to end November at 60.5, little changed from the 60.4 mid-month flash and noticeably lower than October's 63.8. Year-ahead inflation expectations are expected to hold at the mid-month's elevated 4.4 percent that was up from 4.2 percent in October.

The University of Michigan's Consumer Survey Center questions households each month on their assessment of current conditions and expectations of future conditions. Preliminary estimates for a month are released at mid-month and are based on about 420 respondents. Final estimates are released near the end of the month and are based on about 600 respondents.

The pattern in consumer attitudes and spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.

This balance was achieved through much of the nineties and, in large part because of this, investors in the stock and bond markets enjoyed huge gains. It was during the late nineties that the consumer sentiment index hit its historic peak, reaching levels that were never matched during the subsequent 2001 to 2007 expansion nor during the long expansion following the Great Recession.

Consumer spending accounts for more than two-thirds of the economy, so the markets are always dying to know what consumers are up to and how they might behave in the near future. The more confident consumers are about the economy and their own personal finances, the more likely they are to spend. With this in mind, it's easy to see how this index of consumer attitudes gives insight to the direction of the economy. Just note that changes in consumer confidence and retail sales don't move in tandem month by month.