Consumer Sentiment Sinks In November

A survey released Wednesday showed that consumer sentiment hit a two-year low in November on high fuel prices, the poor housing market and concerns about inflation. The Reuters/University of Michigan Consumer Sentiment index fell to 76.1 in November, above a forecast 75 but below October's reading of 80.9 and last November's reading of 92.1. "Rising prices for fuel and food had a devastating impact on household budgets, and falling home prices have diminished consumers' sense of financial security," said Richard Curtin, director of the survey. With the exception of one reading following Hurricane Katrina in 2005, the index is at its lowest point since 1992. "The data points to slowing growth in the U.S. economy and the big issue is what's the Federal Reserve going to do about it," said Meg Browne, senior currency strategist at Brown Brothers Harriman. The survey also said holiday spending will likely drop 4.0% to its lowest in five years. Plans to buy homes, vehicles, and large household durables all fell in November. Ninety percent of consumers polled listed "unfavorable economic developments" as the reason for their pessimism. Consumers are forecasting that inflation will be 3.4% over the next year, up from 3.1% last month. In another sign of potential weakness, the Conference Board's index of leading economic indicators fell 0.5% in October.

Sources: Wall Street Journal, Reuters, MarketWatch
Commentary: Consumer Sentiment Hits ‘Danger Zone’ • The Dow’s 361-Point Decline: Is the Writing on the Wall?
Stocks to watch: AGG, DIA, SPY

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Comments

[Frank Li]

Wonder who provided the forecast that the results beat, and what date was it made... Bet it wasn't made before September.