High prices continue to erode purchasing power, and U.S. consumer confidence remains sluggish.

November 6 - A preliminary survey by the University of Michigan shows that U.S. consumer sentiment rose slightly by about 6%. Expectations for personal financial situations and business conditions improved across multiple areas, but the improvement was mainly concentrated among independent voters. Although confidence rebounded among low- and middle-wealth consumers, confidence among high-wealth consumers who hold substantial stock holdings actually fell 5% following recent significant volatility in the stock market. In addition, consumers' comments show that their concerns about an AI bubble are intensifying. However, compared with AI-related concerns, the cost of living remains consumers' top concern. About 57% of respondents voluntarily mentioned that high prices have eroded their standard of living, the highest level since May this year and above the 46% before the outbreak of the Iran conflict in February. Although consumer sentiment improved this month, it is still down 10% compared with February.

The survey was conducted between October 20 and November 2. In the two months before the midterm elections, more than two-thirds of consumers expected Democrats to win control of the House, and more than half of respondents also expected Democrats to win the Senate. The inflation expectation for the next year fell to 4.3% this month from 4.7% last month. Although this level is the lowest since August, it is still significantly higher than the 3.4% in February before the outbreak of the Iran conflict and also higher than all readings in 2024. Longer-term inflation expectations edged down to 3.4% from 3.5% in October, still significantly above the 2.8% to 3.2% range in 2024.