The University of Michigan and Thomson Reuters report that consumer confidence rose to 84.9 in November, up from 82.6 in October. This is its highest point since July 2007 and mirrors similar growth seen in the competing survey from the Conference Board. Americans’ perceptions about both the current and future economic environment was higher, with improvements surrounding present conditions jumping more (up from 88.1 to 91.3).
The forward-looking component increased from 79.0 to 80.8, suggesting that consumers remain cautiously optimistic about the coming months. Overall, these data are consistent with rising retail sales and personal spending numbers. They also imply that consumers are less concerned about the fiscal cliff than either policymakers or business leaders are. This, of course, might change, particularly if the political wrangling for a compromise to avert the cliff becomes contentious (and as the cliff starts to get more attention in the media, as it has this week post-election). For now at least, higher consumer sentiment and durable and nondurable goods spending benefits manufacturers.
Inflationary expectations have eased somewhat over the past few months. In August, consumers expected prices to rise 3.6 percent over the next 12 months; that has fallen to 3.0 percent in November. This suggests modest inflationary pressures, with lower energy costs pushing anticipated prices lower for three straight months.
Chad Moutray is the chief economist at the National Association of Manufacturers.