Consumer Sentiment Rebounds to a Three-Month High as Inflation Expectations Ease

November University of Michigan Sentiment: 51.0 (estimate 48.0; October 48.0) Current Conditions: 51.0 (estimate 47.0; October 46.7) Expectations: 50.9 (estimate 49.0; October 48.8) 1-Year Inflation: 4.3% (estimate 4.6%; October 4.7%) 5-10 Year Inflation: 3.4% (October 3.5%) Executive Summary The preliminary November read of University of Michigan consumer sentiment rose 6.3% to 51.0, the highest since August and well above the 48.0 consensus, with both current conditions and expectations also at their highest since August.

The gain was “concentrated primarily among independents,” whose sentiment jumped almost 10 points, while sentiment “fell 5% for those with the largest stock portfolios” amid “growing anxiety over a possible AI bubble.” Notably, interviews ended November 2, before Thursday’s AI rout and the midterm results.

Year-ahead inflation expectations fell to 4.3%, the lowest since August, and long-run expectations to 3.4%. Both remain above where they were before the Iran conflict. Consumer sentiment bounced more than expected in early November according to the University of Michigan’s preliminary index, which rose to 51.0 from 48.0, the highest since August , topping the 48.0 median in a Bloomberg survey and every bank forecast in my Day Ahead .

It’s 6.2 points above May’s record low of 44.8 but unchanged from a year ago and per the release still “down 10% from February,” just before the Iran conflict began. It follows October’s upward revision to 48.0. Both components improved and also beat estimates.

Current conditions rose 9.2% to 51.0 and future expectations 4.3% to 50.9, each the highest since August. Interviews ran October 20 to November 2. Per Bloomberg, a gauge of current personal finances rose to a four-month high, and buying conditions for durable goods rebounded from their record low in October.

Independents Did the Lifting Per Surveys of Consumers Director Joanne Hsu, the improvements in expected personal finances and business conditions “were concentrated primarily among independents.” Their sentiment jumped to 52.1 from 42.4, the highest since August 2025 and, as Bloomberg put it, the strongest in more than a year, while Democrats (35.9) and Republicans (80.9) both slipped.

Democrats’ view of current conditions fell again, to 36.1 from 38.7. That matters because independents have tracked the national number closely, a point Hsu made in a July special report . The Biggest Stockholders Turned Cautious One group going the other way though was the largest stockholders.

Hsu: “ While sentiment lifted for lower- and middle-wealth consumers, it fell 5% for those with the largest stock portfolios in the wake of a relatively turbulent period in stock markets. Moreover, consumers’ comments revealed growing anxiety over a possible AI bubble.” In addition, in a statement reported by Bloomberg , Hsu said “the personal finances of consumers with the largest stock portfolios dropped 12% this month to their lowest reading since April, likely due to agitation in stock values in recent weeks, while all other wealth groups saw modest improvements.” And as a reminder the survey closed November 2, ahead of Thursday’s AI rout .

Cost of Living Still Comes First Hsu said AI worries “were dwarfed by cost of living concerns.” About 57% of consumers spontaneously said high prices have eroded their living standards, the highest since May and up from 46% in February. In that regard, the report included a chart showing a rise since January in the share of consumers who see inflation, rather than unemployment, as the bigger risk in the year ahead (below).

Inflation Expectations Ease Despite the expressed cost-of-living concerns, year-ahead inflation expectations fell to 4.3% from 4.7%, the lowest since August , and below the 4.6% expected. Hsu noted though that is still “substantially above the 3.4% seen in February before the Iran conflict began, along with all 2024 readings.” Long-run expectations edged down to 3.4% from 3.5%, back to September’s level and still above the 2.8% to 3.2% range of 2024.

The peak was 4.4% in April 2025. What to Watch The final November read on November 20 will capture the midterm results and this week’s market turbulence. Going in, “more than two-thirds of consumers expected Democrats to win the House, and over half anticipated the same for the Senate,” per an October 30 special report , and both occurred .

Things to watch are how the election and stock selloff this week impact sentiment, and whether year-ahead inflation expectations keep easing toward February’s 3.4%. University of Michigan Surveys of Consumers