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The
University of Michigan's preliminary November reading on the
overall index on consumer sentiment came in at 54.7, down from
59.9 in the prior month.
The 8.7% decline, which erased about half of the gains since the
index's tumble to a historic low in June, also came as gasoline
prices pushed higher.
Economists polled by Reuters had forecast a preliminary reading
of 59.5. The survey's reading of one-year inflation expectations
edged up to 5.1% from 5.0% in October. The survey's five-year
inflation outlook rose to 3.0% from 2.9% in October.
That suggested that inflation could remain uncomfortably high,
even though price pressures showed signs of starting to subside
in October. Data on Thursday showed consumer prices rose less
than expected in October, pushing the annual increase below 8%
for the first time in eight months.
"The Fed telegraphed their intentions to slow the pace of rate
increases and this report will not likely alter those
intentions," said Jeffrey Roach, chief economist at LPL
Financial in Charlotte, North Carolina.
"However, those views could change if inflation expectations
reach the elevated levels (of) earlier this year."
The deterioration in sentiment this month was across the board,
with buying conditions for long-lasting manufactured goods
falling 21% "on the basis of high interest rates as well as
continued high prices."
While that is consistent with a shift in spending to services
from goods, some economists do not expect a collapse in consumer
spending. The University of Michigan survey continues to
struggle below its pre-pandemic levels.
In contrast, the Conference Board's consumer confidence index
remains above early pandemic lows.
"The correlation between changes in monthly consumer sentiment
and real consumer spending is low, especially for this measure
and especially in the short run," said Scott Hoyt, a senior
economist at Moody's Analytics in West Chester, Pennsylvania.
"Further, consumers have abundant excess saving, and recent data
suggests they are willing to dig into this pile of cash to keep
their real spending at least stable."
(Reporting By Lucia Mutikani; Editing by Chizu Nomiyama and
Jonathan Oatis)
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