University of Michigan Preliminary Consumer Sentiment Index Declines for November

The University of Michigan today (11-12-21) released its preliminary Consumer Sentiment Index (CSI) for November. The CSI declined to a reading of 66.8 in November, down from 71.7 in October. This is a month-over-month decrease of -6.8% and a year-over-year decrease of -13.1% (76.9 in November 2020).

Current Economic Conditions dropped to a reading of 73.2 in November, down from 77.7 in October. This is a month-over-month decline of -5.8% and a year-over-year decline of -15.9% (87.0 in November 2020).

Finally, the Index of Consumer Expectations declined to a reading of 62.8 in November, down from 67.9 in October. This is a month-over-month decrease of -7.5 and a year-over-year decrease of -10.9% (70.5 in November 2020).

In a statement prepared to accompany the release of the preliminary October CSI, Richard Curtain, Director of Surveys for the University of Michigan said:

“Consumer sentiment fell in early November to its lowest level in a decade due to an escalating inflation rate and the growing belief among consumers that no effective policies have yet been developed to reduce the damage from surging inflation. One-in-four consumers cited inflationary reductions in their living standards in November, with lower income and older consumers voicing the greatest impact. Nominal income gains were widely reported but when asked about inflation-adjusted gains, half of all families anticipated reduced real incomes next year. Rising prices for homes, vehicles, and durables were reported more frequently than any other time in more than half a century.”

“The reactions of consumers to surging inflation should be no surprise, as it has been reported during the past several months. The description that inflation would be ‘transient’ has the undertone that consumers could ‘grin and bear it’ as economic policies counted on a quick and automatic self-correction to supply and labor shortages. Instead, the pandemic caused economic dislocation unlike any prior recession, and has been intertwined with partisan interpretations of economic developments.”