·
The November reading of consumer sentiment from the University of
Michigan rose 10.0% m/m to 81.6, adding a bit to the improvement through
mid-month. Consensus expectations had been for a rise to 81.0.
· During the last ten years there has been a 78% correlation between the level of consumer sentiment and the y/y change in real consumer spending.
· Improved expectations fostered the m/m rise. The index of Consumer expectations rose 10.1% as expected business conditions during the next year surged 22.1% while expectations for personal finances recovered all of the prior month's drop. The mean expected inflation rate for the next twelve months fell further to 4.1% from 5.5% expected in October & September.
· The current conditions index held onto the improvement through mid-month and rose 9.9% versus October. The reading of personal finances rose 7.3% and reversed all of the October decline and the reading of buying conditions for large household goods jumped 12.9% to the highest level since August.
· The University of Michigan survey is not seasonally adjusted. The mid-month survey is based on telephone interviews with 250 households nationwide on personal finances and business and buying conditions. The survey is expanded to a total of 500 interviews at month end.
· Why Hasn't the Jump in Oil Prices Led to a Recession? from the Federal Reserve Bank of San Francisco is available here.