Today's Report (11/24/2021)

Comments From Chief Economist, Richard Curtin

Consumers expressed less optimism in the November 2021 survey than any other time in the past decade about prospects for their own finances as well as for the overall economy. The decline was due to a combination of rapidly escalating inflation combined with the absence of federal policies that would effectively redress the inflationary damage to household budgets. While pandemic-induced supply-line shortages were the precipitating cause, the roots of inflation have grown and spread more broadly across the economy.

What is it?

This is a monthly survey of US consumer confidence about the national economic conditions. It tries to gauge the consumer's future purchasing plan. It is a near real-time assessment of consumer attitudes on business climate, personal finance, and shopping.

Data is collected up to a day or two before the official release.

It questions 500 respondents.

University of Michigan 1 YR Inflation

University of Michigan (UoM) Inflation Expectations measures the percentage that consumers expect the price of goods and services to change during the next 12 months. There are two versions of this data released two weeks apart, Preliminary and Revised. The preliminary release is the earliest so tends to have more impact.

What are the fundamental effects?

It is a proven accurate indicator of the future course of the national economy. Higher consumer sentiment could lead to higher inflation.

How does it affect the markets?

CURRENCY - Foreign investors favor happy American customers, as personal spending increases.

STOCKS - The equity market prefers when consumers are confident because they are more likely to take more risky investments.

BONDS - As consumer sentiment rises it could mean that’ll spend more on riskier investments, which could lead to bond prices being reduced and yields rising to attract more investors.