Final November 2019 Michigan Consumer Sentiment Improves

The final University of Michigan Consumer Sentiment for November came in at 96.8 - up from the preliminary of 95.7, up from October's 95.5, and up from September's 93.2.

 

The Econoday consensus range was 93.0 to 96.1 (consensus 95.7)

Surveys of Consumers chief economist, Richard Curtin, makes the following comments:

The November 2019 consumer sentiment figure was nearly identical to the average level recorded since the start of 2017 (97.0). In 30 of the past 35 months the Sentiment Index was 95.0 or higher, a level of optimism second only to when the Index was above 100.0 for 34 out of 36 months from January 1998 to December 2000, averaging 106.0. 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. One side anticipates a recession, while the other side expects an uninterrupted expansion in the year ahead. To be sure, there is ample reason for both optimism as well as pessimism, but not the extreme differences voiced by these groups.

Most consumers are not so naive as to anticipate continued declines in inflation, unemployment, and interest rates, but few consumers anticipate sizable increases in these key economic factors anytime soon. Personal spending will be energized by record favorable evaluations by consumers of their personal financial situation, with gains expected across the entire income distribution, net increases in household wealth, the renewed appeal of price discounting, and reduced mortgage rates (see the chart). Nonetheless, there is little point in dismissing the 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.

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