Yuuuuuge Increase In Consumer Confidence

| About: ProShares Inflation (RINF)

Consumer Confidence for the month of November showed a large uptick as the headline index increased from an upwardly revised reading of 100.8 up to 107.1. It was also comfortably above consensus expectations for a reading of 101.5. As shown in the chart below, Consumer Confidence is not only well above its long-term average of 93.5, but it is also at a new cycle high (highest reading since July 2007).

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We have made numerous mentions over the years about how increases in Consumer Confidence during the current recovery have been driven disproportionately by higher-income consumers. Well, in the last several months that trend appears to be changing. The chart below shows Consumer Confidence grouped by consumers with incomes above $50K and those with incomes between $35K and $50K.

As shown in the chart, as the recovery gained ground in 2009, the space between the red line (incomes above $50K) and blue line (incomes between $35K and $50K) steadily widened, but in early 2015, the pace of widening slowed, and has now actually started to shrink.

This is also illustrated by the fact that while confidence levels for both income groups increased in November, the increase was much larger for consumers with incomes between $35K and $50K compared to consumers with incomes of more than $50K.

In fact, while confidence for consumers with incomes above $50K remains below its cycle high of 128.4 from March 2015, the index for consumers with incomes between $35K and $50K actually surged to a new cycle high. While critics of Trump have suggested that his tax policies would have a much greater impact on the rich, it is middle to lower-end consumers that have seen the biggest boost to sentiment following his election.

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On a final note, while the stock market surged in the days leading up to and after the election, and individual investors are more bullish than they have been in several months, sentiment towards stock prices in this month's report actually turned less optimistic. In fact, based on this month's report, more consumers are actually expecting lower stock prices (33.0%) than higher stock prices (30.3%). Go figure.

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