Consumer expectations for higher wages are at an 8-year high

Consumers are upbeat about the economy and their future income prospects, according to the University of Michigan’s latest survey.

The preliminary headline consumer sentiment index for November was 93.1. Economists had estimated a rise to 91.5 from 90, according to Bloomberg.

The Survey of Consumers’ Richard Curtin noted in the release , “Two trends dominated the early November data: consumers anticipated somewhat larger income increases during the year ahead as well as expected a somewhat lower inflation rate. This meant that consumers held the most favourable inflation-adjusted income expectations since 2007.

Inflation expectations one year ahead fell to 2.5% (2.7% prior), and 5-10 year ahead inflation expectations were unchanged at 2.5%, an all-time low.

The prior release, for October, showed that consumer confidence was driven by low-income households, whose members were not as disturbed by the recent stock market volatility as those in high-income households.The Survey of Consumers’ Richard Curtin noted in the release that the increase in confidence was due to an improved outlook in the domestic economy.

It also noted that consumers were more optimistic about their financial prospects than at any time since 2007.

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