U.S. consumer sentiment declined this month, with November's preliminary reading coming in at 50.3 (revised from xx.0) vs. 53.6 in October and 55.1 in September. This is below the consensus of 53.2 in the Econoday survey of forecasters. Weaker personal finances as well as a gloomy outlook for business conditions dragged down confidence.

With the federal government shutdown dragging on for over a month, consumers are now expressing worries about potential negative consequences for the economy, the report added.

The exception was consumers with significant stock holdings, with their sentiment boosted by continued market strength.

Preliminary year-ahead inflation expectations bumped up to 4.7 percent in November, from 4.6 percent in October.

Long-run inflation expectations in November declined to 3.6 percent from 3.9 percent last month.

Sentiment expected down again to 53.2 in the first report for November from 53.6 in October as consumers remain worried about their jobs and inflation.

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.