US consumer sentiment deteriorates more than expected in November
US consumer sentiment deteriorated a little more than expected this month, according to a final reading from the University of Michigan.
The consumer sentiment index fell to 97.5 from 98.6 in October and 98.5 in November last year, below the preliminary reading and expectations of 98.3.
Meanwhile, the index of current economic conditions declined to 112.3 in November from 113.1 the month before and 113.5 in the same month last year.
The index of consumer expectations slipped to 88.1 this month from 89.3 the month before and 88.9 in November 2017.
Surveys of Consumers chief economist Richard Curtin pointed out that the November reading was nearly in the middle of the 11-month range of 95.7 to 101.4.
"Although the data recorded a decline of 2.8 index points following the election, the drop was related more to income than political party: among those with incomes in the bottom third, the sentiment Index rose by 10.4 points and fell by 6.6 points among those in the top third of the income distribution. In contrast, the sentiment index remained unchanged among Democrats and Republicans prior to and following the election."
Curtin said consumers' interest rate expectations have always traced the outlines of economic cycles.
"As expansions lengthen, the number of consumers who expect interest rate increases gradually increases. After some threshold is reached, however, consumers in large numbers abruptly anticipate future declines in interest rates. Sales declines are then accelerated not only by falling job and income prospects but also from the expectation of falling interest rates in the future. While there is no reason to anticipate a sudden change in interest rate expectations in the next few months, it is still an important task for the Fed to avoid hitting the threshold that causes widespread postponement of purchases."