The final University of Michigan consumer sentiment index for November is revised down to 71.8 after a preliminary 73.0, but remains above 70.5 in October and 61.3 in November 2023. The final reading is below the consensus of 73.0 in the Econoday survey of forecasters. While the outcome of the presidential election had an impact on consumers' perceptions of economic conditions in the present and near future, downward revisions in the aftermath do not wipe out an overall more positive attitude with the index at its highest since 77.2 in April.

The current conditions index is revised slightly lower to 63.9 in November after 64.9 in October and below 73.3 in November 2023. The underlying trend for current conditions has been largely unchanged for the past three months. The expectations index is revised down to 76.9 in November but is above 74.1 in October and 67.4 in November 2023.

The one-year inflation expectations measure is down a tenth to 2.6 percent in November and its lowest since 2.5 percent in December 2020. Moderation in gasoline prices has helped ease upward price pressures in the near term. The five-year inflation expectations measure is up two-tenths to 3.2 percent to its highest since 3.2 percent in November 2023. Confidence that inflation will decline over the medium term is slightly worse, although broadly inflation expectations can be said to remain well-anchored. This is a hint to Fed policymakers that inflation expectations line up with some recent disappointing data in the price indexes as far as progress in disinflation is concerned.

Sentiment came in stronger than expected in the November flash with the survey sample taken before the presidential election result. Oddly, forecasts call for no change in the final November report with the survey following November 5. Estimates center on a 73.0 reading for sentiment, unchanged from the flash, and up from 70.5 in October and 61.3 in November 2023. Inflation expectations are expected at 2.6 percent versus 2.6 percent in the November flash and 2.7 percent in October final.

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.