Consumer Confidence Unexpectedly Drops On Inflation, Rate-Hike Fears

Tyler Durden's picture

UMich consumer sentiment declined from 100.7 to 97.8 in the preliminary November print, disappointing expectations of a small rise as anticipation of a pickup in inflation and higher interest rates weighed on the gauge.

Even with the decline, sentiment was the second-highest since January, reinforcing other reports that Americans remain optimistic about employment and the economy.

Other highlights include:

  • Consumers saw the inflation rate in the next year at 2.6 percent, up from 2.4 percent the prior month
  • Consumers expected an annual income gain of 2.1 percent for the second straight month, the best two-period average since 2008
  • Inflation rate over next five to 10 years held at 2.5 percent
  • Six in 10 consumers saw stock-market gains as likely in the year ahead
  • References to low mortgage rates fell to 32 percent in early November from 40 percent last month

Consumers (and policy makers) have four key concerns: prospective trends in jobs, wages, inflation, and interest rates. An improving labor market was spontaneously mentioned by a record number of consumers in early November, and anticipated wage gains recorded their highest two-month level in a decade. These favorable trends were countered by a slight rise in year-ahead inflation expectations and a growing consensus that interest rates will increase during the year ahead.

Americans are as exuberant about their wealth effect as they were at the peak ahead of the last crisis...

“While the majority judged current conditions in the economy favorably and consumers anticipated continued growth on balance, consumers judged the outlook less satisfactory, and were equally divided about whether the expansion would last another five years,” Richard Curtin, director of the University of Michigan consumer survey, said in a statement.

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shankster's picture

Unexpectedly...there's that word again.

Five Star's picture

Confidence in the market meanwhile is at highs last seen in 2000

topspinslicer's picture

Lack of an income fears

red1chief's picture

Inflation will not be the big problem, it will be deflation met with negative rates. It's wise to extend maturities somewhat, otherwise you will be "bailed in" through negatve rates.

LawsofPhysics's picture


the "flation" debate is such bullshit, and it is purely a monetary thing.

Let's be honest here, with almost 8 BILLION people stuck in this biosphere called earth all competing for the remaining resources required to maintain a decent standard of living, there is plenty of demand for REAL SHIT.

demand for useless financial "products", currencies, and corrupt paper-pushers? NOT SO MUCH.

No such thing as "deflation" you disingenuous fuck.

Nobody For President's picture

You missed your calling, you should be a member, maybe chairman, of the FED.

LawsofPhysics's picture

Please, the average consumer doesn't even understand how interest works.

What a load of horseshit.

"Full Faith and Credit"

Ajax-1's picture

Michiganites must be some stupid mother fuckers.

For any Michiganites that can read, understand this; interest rates will not rise because paying additional interest on the debt would be completely unserviceable. 

LawsofPhysics's picture

The debt is fraudulent.

"Full Faith and Credit"

GreatUncle's picture

Ain't you noticed the new 2 tier system introduced since 2008.

The serf pays all interest on any debt ...

The banks get ZIRP freebie ... and pay next to no returns for desposits


The point ... debt would be completely unserivceable.

CTRL-P is because the debt is already unserviceable.


They need real growth to keep the debt under control but after a decade of near 0% growth.

If they stop CTRL-P now with 0% growth they lose.


NEED TO FLUSH ALL THE BAD DEBT to make the debt serviceable and the game to continue.


TheMexican's picture

WTF does rate hike fears have to do with the US consumer when rates are at these levels?  Please explain...

spastic_colon's picture

how convenient.....if the stock market was up yesterday confidence would have hit new highs....thats what you get when you include the completely rigged stock market in a sentiment measure.

its also useless when you ask kindergartner level questions......

silverer's picture

Inflation rate of 2.6%? What a joke. Ponzi BS at its finest.

Here's the real inflation rate:

spastic_colon's picture

much more accurate and a sad treatise on early education purposefully not teaching basic economics and financial management; .gov loves the slave trade.

"....the Index shows that their income can’t keep up with their expenses, and it explains why they increasingly have to turn to the government for entitlements to bail them out."

Ajax-1's picture

Consumers will continue experience a triple insult stemming from Central Bank mischief: Inflation coupled with wage stagnation and interest rate repression.

buzzsaw99's picture

more black ads can fix this.

spastic_colon's picture

every time i see a commercial i want to say "welcome to the machine"; directing ads to only 15% of the population should be super profitable.....such an obvious joke.

Xscream's picture

Of all the useless surveys......THIS is one is champion       and some people get paid pretty good to do it. uuuugh

jamesmmu's picture

So is that mean crash is only 6 months away?

GotAFriendInBen's picture

Janet needs to reassure consumers that their 28% usury rate on their credit cards won't be going up too much

Give them the confidence they need to get that leased IphoneX fixed

Nobody For President's picture

yep total bullshit. I know some pretty smart people that, until they met me, thought the Federal Reserve Bank of the US was a government organization - some didn't believe me that it was a private corporation, chartered by Congress and owned by banks. AND has never been audited by the gubernmint that is supposed to 'supervise' it.

I actually bet one guy, and made him google it on the spot via Wikipedia...

It is a weird organization, but most people don't have a clue about what the power to set inter-bank loans really means. I call total bullshit on this 'survey' - I suspect the way the questions are asked determine the results. (Duh....)

Seasmoke's picture

So why do the assholes in DC always thank the Fed fuckers for their service to their country. Absolute bullshit and liars. 

Seasmoke's picture

How is Gold price still not $12,000USD ???

scubapro's picture


as of 11.07 looks like no one wants gold....$10/oz in 10minutes.....GET ME OUT!    but of course no one wants anything today, espcially oil, interest paying instruments, gold and not that keen on equity either.

Lost in translation's picture

Keep an eye on gas prices in CA.

Most folks here, aren’t.

But as the rectal bleeding intensifies, they may start asking some questions.

Questions like, “why is Kevin De León thrusting a crowbar in my anus?”

24Richie's picture

It fell from a reading which was a 13 year high.  

nsurf9's picture

The Fed cares about consumer sentiment like it does pesky mosquitos.

The only inflation metric the Fed looks at appears to be wage price inflation/acceleration.  And, our crooked gOVERNMENT has insured there are plenty of low wage accepting illegal (or otherwise) immigrants to ensure it is kept low. 

They'll never have to raise the interest rates until the currency starts goes Venezuelan, Zimbabwen, or Weinmaren.  But, that's why all the Rothschild central banks dropped their rates in sync - camouflage.

Per "GreatUncle," above, good luck with those over-the-limit fees, late fees, fee fees, etc and that 30% credit cards doubling, trippling, and (what the) quadrippling though!