US Consumer Sentiment Rises to Three-Month High in November, Independents More Confident, Inflation Expectations Improve

US consumer confidence climbed to a three-month high in November, lifted by slightly better views on personal finances and the economic outlook.

According to a survey released on Friday, the University of Michigan's preliminary November consumer sentiment index rose to 51 from 48 in October. The median forecast in a Bloomberg survey of economists had expected it to remain at 48.

The improvement was concentrated among independent voters, whose reported consumer confidence reached its highest level in a year. By contrast, confidence among Democratic and Republican voters both deteriorated.

Concerns about the cost of living remained top of mind for many Americans. About 57% of respondents spontaneously mentioned that high prices were eroding their standard of living, the highest share since May.

Despite limited layoffs and strong economic growth, household finances remain stretched as prices rise faster than wages. The Democrats' decisive midterm election victory reflected deep voter dissatisfaction with the state of the economy, particularly complaints about the high cost of food, gasoline and housing.

Inflation Expectations Improve, AI Bubble Worries Emerge

Inflation expectations for the year ahead improved but remained elevated. Consumers expect prices to rise 4.3% over the next year, a three-month low. They also expect prices to rise at an annual average pace of 3.4% over the next five to 10 years, also down from last month.

Joanne Hsu, the survey's director, said in a statement that beyond inflation concerns, "consumers' feedback also revealed growing anxiety about a possible AI bubble."

She added: "Because of stock market volatility in recent weeks, the personal finances of consumers with large stock portfolios fell 12% this month to their lowest level since April, while finances improved modestly for all other wealth groups."

An index measuring current personal finances rose in November to a four-month high, while Americans' views on durable goods buying conditions also rebounded from a record low. Both the current conditions and expectations indicators rose to their highest levels since August.

The survey period covered responses from October 20 to November 2.