US consumer sentiment reached its highest level in six months, while year-ahead inflation expectations dropped to their lowest point since December 2020, preliminary results from the University of Michigan's Surveys of Consumers indicated on Friday. The primary sentiment gauge surged to 73 in November from 70.5 the previous month, marking the fourth consecutive monthly improvement.
The consensus was for a 71 reading in a survey compiled by Bloomberg. On an annual basis, the measure increased by 19%, the survey highlighted. The index for current economic conditions fell 0.8% sequentially to 64.4, while the expectations measure noticeably improved by 5.9%, reaching its highest level since July 2021, at 78.5, according to the survey. Expectations regarding personal finances improved by 6%, reflecting "strengthening" income prospects, while short-run business conditions experienced a rise of 9%, as shared by Surveys of Consumers Director Joanne Hsu.
Long-run business conditions climbed to its "most favorable" position in nearly four years, Hsu detailed. Interviews for the survey were completed before Tuesday's US presidential election, where Donald Trump defeated Kamala Harris, marking his return to the White House. Year-ahead inflation expectations declined to 2.6% this month from 2.7% in October, while the five-year price growth outlook increased to 3.1% from 3%, according to the survey findings. On Thursday, the Federal Reserve reduced its benchmark lending rate by 25 basis points, following a 50-basis-point cut in September.
Despite progress in inflation towards the Federal Open Market Committee's 2% target, it remains "somewhat elevated," commented the FOMC on Thursday..