Consumer sentiment fell this month due to inflation, overseas conflicts

Consumer sentiment fell this month as concerns continued over inflation and conflicts in the Middle East and Ukraine, according to November's University of Michigan Surveys of Consumers. .The index of consumer sentiment fell 5.3 percent to 60.4 from 63.8 in October. This month's reading is still 6.5 percent higher than the year-ago mark of 56.7. The index of current economic conditions fell nearly 7 percent from October to 65.7, which is still nearly 12 percent higher than 58.7 in November 2022..Year-ahead inflation expectations increased to 4.4 percent. The reading, which is the highest since April, is above the range of 2.3 percent to 3 percent in the two years leading up to the pandemic. Long-term inflation expectations also increased to a 12-year high of 3.2 percent from 3 percent in October. Both short- and long-term gas price expectations reached record highs for this year. ."Ongoing wars in Gaza and Ukraine weighed on many consumers as well," added Surveys of Consumers Director Joanne Hsu. "Overall, lower-income consumers and younger consumers exhibited the strongest declines in sentiment. In contrast, sentiment of the top tercile of stockholders improved 10 percent, reflecting the recent strengthening in equity markets." .The index of consumer expectations fell 4 percent in November to 56.9, which is still 2.5 percent higher than 55.5 last November. The long-run economic outlook fell 12 percent over increasing concerns about the negative impact of high interest rates, Hsu said. .The Conference Board's October Consumer Confidence Index fell to 102.6 from 104.3 in September, while the index tracking consumer assessments of current business and labor market conditions fell to 143.1 from 146.2. The short-term outlook for income, business and the labor market conditions fell to 75.4 from 76.4 in September. .Chief Economist Dana Peterson said the drops in sentiment came amid rising grocery and gasoline prices. "Consumers also expressed concerns about the political situation and higher interest rates," Peterson added.