(Bloomberg) — US consumer sentiment rose in November by less than previously reported, reflecting deep divisions among Republicans and Democrats about the path for the economy after Donald Trump’s presidential election win.
The University of Michigan’s final November index edged up 1.3 points from a month earlier to 71.8, data showed Friday. While the latest figure is still the highest since April, it’s softer than the preliminary reading of 73, based on responses collected just before the election.
A gauge of sentiment among Republicans surged in November to the highest since 2021, while that of Democrats slid to a more than one-year low. Confidence among political independents eased.
Historically, consumers who align politically with the party in power have better views on the economy than those who align with the opposing party.
“Ultimately, substantial uncertainty remains over the future implementation of Trump’s economic agenda, and consumers will continue to recalibrate their views in the months ahead,” Joanne Hsu, director of the survey, said in a statement.
The report also showed consumers’ year-ahead inflation expectations eased to 2.6%, the lowest since 2020. They saw inflation rising 3.2% over the next five to 10 years, up from 3% a month earlier and the highest since November 2023.
While Republicans were more upbeat about inflation, expectations among Democrats “worsened from last month on a number of dimensions: inflation, personal incomes, overall labor markets, and business conditions,” Hsu said.
While many Americans are hopeful president-elect Trump’s policies will lead to an improvement in their financial situation, a number of economists have warned that tariffs, deportation of undocumented immigrants and tax cuts risk driving inflation higher and restraining economic growth.
Business Activity
The consumer survey stands somewhat in contrast to separate figures Friday showing more optimism among businesses in the wake of Trump’s victory. The S&P Global flash November composite index for service providers and manufacturers advanced to the highest level since April 2022.
The latest report is consistent with other recent surveys, including those for small businesses and homebuilders.
Meanwhile, Bloomberg’s latest monthly survey of economists indicated the Federal Reserve will take a more measured approach to interest-rate cuts next year amid stubborn inflation and limited prospects that price pressures can cool much under Trump.
The University of Michigan current conditions gauge fell to 63.9 from a month earlier, while the expectations index increased to 76.9, the highest since March.
Consumers’ perception of their expected financial situation advanced in November to a seven-month high.
(Adds graphic, S&P Global business activity)
©2024 Bloomberg L.P.