Americans are not feeling all that merry going into the holiday season.
Consumers expect the economy to weaken and see recent declines in inflation as only temporary, a key survey from the University of Michigan showed Wednesday.
The University of Michigan’s sentiment of consumer sentiment fell from 63.8 in October to 61.3 in November. A preliminary reading released mid-month showed a steeper decline to 60.4. Economists had forecast a score of 61.1.
Views of both current and expected conditions declined in the month, with expected business conditions dragging down the index despite some improvement in views of personal finances.
“More-favorable current assessments and expectations of personal finances were offset by a notable deterioration in expected business conditions. In particular, long-run business conditions plunged by 15% to its lowest since July 2022,” Survey of Consumers Director Joanne Hsu said.
The Thanksgiving blues are weighing on younger and middle-aged Americans more than older Americans.
“Younger and middle-aged consumers exhibited strong declines in economic attitudes this month, while sentiment of those age 55 and older improved from October,” Hsu said.
Year-ahead inflation expectations jumped to 4.5 percent in November, up from 4.2 percent the month prior. That was above the midmonth reading of 4.4 percent and above the consensus forecast. Long-run inflation expectations, which are closely watched by the Federal Reserve, rose to 3.2 percent from 3.0 percent. That’s the highest reading since 2011.
Long-run inflation expectations increased from 3.0% last month to 3.2% this month, a reading last seen in 2011.
These expectations have risen in spite of the fact that consumers have taken note of the continued slowdown in inflation; consumers appear worried that the softening of inflation could reverse in the months and years ahead,” Hsu said.