Talking Points:
- The final figure of the U. of Michigan Sentiment survey in November was 98.5 marking a +5.0% Y/y change
- Short-term inflation expectations was up 30 basis points over last month; long-term inflation was up just 10 basis points over the same period
- Consumers’ income expectations are resilient despite stagnant wages
- US Dollar Index trades in a narrow range following survey data
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Survey Data
Last month we received the preliminary University of Michigan Consumer Sentiment survey dipped below 100 at 97.8. In this morning’s final print narrowed the loss from the mid-month figure coming in at 98.5. This was still below the decade-high peak in October (100.7). Overall, the Sentiment Index has remained largely unchanged since the start of the year holding at the highest levels since 2004.
Although, U. of Michigan reported that the degree of certainty with which consumers hold their economic expectations have changed. Consumers have expressed greater certainty about income, employment, and inflation expectations. The survey report found that the consumer’s increased certainty in income and employment, “has become a key factor that has supported discretionary purchases.” This is despite of the fact that this morning’s jobs report shows wages are actually mostly stagnant.
Oddly, the survey data indicates that changes in fiscal and monetary policies have yet to have any matieral impact on consumer expectations. Overall, the data signaled an expected gain of 2.7% in real consumption expenditures in 2018.
Below is a summary for the final results of the November University of Michigan Surveys:
Chart 1: US Dollar Index 5-minute Intraday (December 8, 2017)
Coming off of Non-farm Payrolls the US Dollar Index largely ignored the survey data. DXY traded about 10 basis points higher but quickly retraced to the pre-data 93.92 level.
--- Written by Dylan Jusino, DailyFX Research
