Preliminary November UMich consumer sentiment comes in at 51.0, above 48.0 forecast

• Last month's Michigan sentiment index: 46.3.
• Current conditions sub-index, where 48.0 was expected.
• Expectations sub-index, where 49.5 was forecast.
• One-year inflation expectations, previously 4.7%.
• Five-year inflation expectations, previously 3.5%.

The University of Michigan's Surveys of Consumers is one of the oldest gauges of US household sentiment, but markets have cooled on the report because its readings frequently fail to match spending. The preliminary data are released at 10 a.m. ET in the first half of the month, drawn from interviews held over the preceding weeks. Near the end of the month, a final reading built on the full sample is published. That early number can sometimes move markets because it is the first glimpse of the month.

Personal finances, business conditions and the wisdom of buying big-ticket items are the inputs to the main Index of Consumer Sentiment. The index has a base of 100, set in early 1966. From the survey come two sub-indexes: current economic conditions and consumer expectations. The Conference Board uses the expectations measure as an input to its Leading Economic Index.

Inflation expectations have lately become the most market-sensitive element of the release. Survey respondents project price changes for the coming year and for the following five to 10 years. The Federal Reserve uses the longer-run number to gauge whether inflation expectations are still anchored, and sharp swings can affect Treasury yields and rate expectations. With the preliminary sample smaller than the final sample, these figures can shift noticeably when the full release arrives.

The survey moved from telephone interviews to online interviews in 2024, making comparisons with its long history harder. There is also a growing partisan tint to the responses, with sentiment moving sharply based on which party holds the White House.

Sentiment readings do not always align with spending, and households often continue buying even when they call themselves pessimistic. Even so, the survey gives a current read on how consumers are responding to inflation, tariffs, gasoline prices, the job market and stock prices. I would argue those readings were more useful for anticipating the midterms than for anticipating the economy's path.