US consumer sentiment reached its highest level in six months, while year-ahead inflation expectations fell to their lowest point since December 2020, as indicated by preliminary results from the University of Michigan's Surveys of Consumers. The main sentiment gauge surged to 73 in November from 70.5 last month, marking four consecutive months of improvement.
The consensus predicted a 71 print in a survey compiled by Bloomberg, highlighting a significant 19% increase year-on-year. The index reflecting current economic conditions experienced a slight decline of 0.8%, settling at 64.4, whereas the expectations measure increased by 5.9%, achieving its highest reading since July 2021 at 78.5.
Expectations regarding personal finances rose by 6%, driven by 'strengthening' income prospects, while short-term business conditions climbed 9%, according to Surveys of Consumers Director Joanne Hsu. Long-term business conditions also improved, reaching their 'most favorable' level in nearly four years.
Notably, interviews for the survey were conducted before Tuesday's US presidential election, where Donald Trump defeated Kamala Harris, marking his return to the White House. Year-ahead inflation expectations decreased to 2.6% this month, down from 2.7% in October, while the five-year price growth outlook increased slightly to 3.1% from 3%.
Recently, the Federal Reserve reduced its benchmark lending rate by 25 basis points, following a previous cut of 50 basis points in September. Although inflation has made progress towards the Federal Open Market Committee's 2% target, it remains 'somewhat elevated,' according to the FOMC..