Consumer Sentiment:  Rate Expectations Continue Higher

Bottom Line: Consumer sentiment for November was revised modestly lower in its final reading. The index remains near its average for the year, though. The survey's economists noted that consumers' expectations for interest rates continued to trend higher. While that is typical of this point in an economic cycle, they noted that there is a discontinuous relationship between consumption and rate expectations with higher and higher rate expectations eventually resulting in a sudden drop in consumption. While we aren't there yet, this bears watching. Consumer Sentiment was REVISED DOWN by 0.8 points in late November to 97.5%, compared with market expectations for no change to 98.3%. Sentiment has improved by 1.3 points over the past 3 months. Despite this month's slight decline, compared to October's final level of 98.6%, sentiment is 1.0% BELOW its year ago level. Current Conditions were REVISED DOWN by 0.9 points to 112.3%. Current conditions are now 1.1% BELOW their year ago level. Consumer Expectations were REVISED DOWN by 0.6 points to 88.1%. Despite this month's slight decline, compared to October's final level of 89.3%, expectations are 0.9% BELOW their year ago level.