WASHINGTON, D.C. November 11, 2024 (Reuters) — U.S. consumer sentiment rose to a seven-month high in early November, with a measure of households’ expectations for the future climbing to the highest in more than three years, led by brightening outlooks among Republicans, a survey showed on Friday. The University of Michigan’s Consumer Sentiment Index climbed to 73.0 this month, the highest since April, from 70.5 in October. The result exceeded the median estimate among economists polled by Reuters for a reading of 71.0.
The survey’s expectations index climbed nearly 6% to 78.5, the highest since July 2021. “Expectations over personal finances climbed 6% in part due to strengthening income prospects, and short-run business conditions soared 9% in November,” survey Director Joanne Hsu said in a statement. “Long-run business conditions increased to its most favorable reading in nearly four years.”
As has been the case for several years now, details of the report showed a wide partisan skew in a survey completed the day before Tuesday’s presidential election in which Republican Donald Trump emerged the victor over Democrat Kamala Harris. Nonetheless, it was Republicans whose attitudes about the future improved the most, according to a breakdown of the results along self-identified party lines.
Expectations among Republican respondents rose more than 17% to 72.0, the highest since October 2020 immediately before Trump lost his bid for re-election, and that drove their overall sentiment score to the highest since April. Democrats’ expectations, by contrast, improved by a much slimmer margin of less than 2%, nudging up their overall sentiment reading to a seven-month high of 94.9.
Independents, meanwhile, grew more grim. Their overall sentiment score dropped 9% to a four-month low of 60.1, with their assessment of current conditions registering at the lowest since the survey began asking respondents to identify their political affiliations each month in February 2017.
U.S. consumers overall, whose sentiment had been broadsided by the inflation surge over the last several years, now see less near-term inflation risk, though their longer-run expectations for price increases remain higher than before the COVID-19 pandemic.
Year-ahead inflation expectations of 2.6% in November ticked down from October’s reading of 2.7% and were the lowest since December 2020. Longer-range inflation expectations edged up to 3.1% from 3.0% in October, within the range of 2.8% to 3.2% that has prevailed since 2021. In the five years prior to the pandemic that longer-run view had ranged between 2.2% and 2.7%.
The Federal Reserve cut rates for the first time in four years in September by half a percentage point and delivered a second cut of a quarter percentage point on Thursday, two days after the election, and Fed Chair Jerome Powell flagged a cautious approach to further cuts.