By Andrew Moran
U.S. consumer sentiment rebounded this month, but concerns surrounding ongoing cost-of-living issues and a potential artificial intelligence (AI) bubble weighed on the outlook.
The University of Michigan’s preliminary November Consumer Sentiment Index, which measures consumer confidence in the U.S. economy and their personal finances, rose to 51 from 48 in October. While this is up 6 percent from the previous month, it’s still down about 10 percent from February.
This month’s reading came in firmly above the consensus forecast of 48.
The widely watched survey—conducted between Oct. 20 and Nov. 2—recorded modest gains in expectations for business conditions and personal finances. Americans’ views of current personal finances and assessments of buying conditions for durable goods bounced back from a record low.
Sentiment, meanwhile, also improved among lower- and middle-wealth consumers, but fell 5 percent for respondents with large stock portfolios.
The improvement in consumer sentiment was largely concentrated among Independents, who reported their strongest level of confidence in over a year. In contrast, sentiment weakened among both Democrats and Republicans.
In addition to ongoing cost-of-living worries, consumer comments highlighted growing anxiety over a possible AI bubble, said Joanne Hsu, director of consumer surveys at the university.
Over the last several weeks, the AI-fueled tech rally has been volatile. The Nasdaq Composite Index slipped into correction territory—down more than 10 percent from its recent peak—following its worst selloff since the tariff shock of April 2025.
“AI worries, however, were dwarfed by cost of living concerns, which continue to be at the forefront of consumers’ minds across the population,” Hsu said.
“About 57 percent spontaneously mentioned that their living standards have been eroded by high prices, the highest seen since May.”
Despite a robust labor market—low layoffs and hiring momentum—revived price pressures have affected household finances.
Real (inflation-adjusted) hourly earnings fell 0.7 percent between September 2025 and September 2026, according to the Bureau of Labor Statistics.
The personal savings rate has steadily fallen this year, from 5.6 percent in January to 3.8 percent in September, according to the Bureau of Economic Analysis.
“Although consumers are tapping into savings to support spending habits, we expect a healthy retail sales period heading into the new year,” Jeffrey Roach, chief economist at LPL Financial, told The Epoch Times in an emailed note.
Consumers’ inflation expectations decelerated this month, according to the University of Michigan.
The one-year outlook slowed to 4.3 percent, down from 4.7 percent in October, the lowest since August. The five-year forecast also eased to 3.4 percent, down from 3.5 percent.
Elevated gasoline prices from the war-driven oil-price shock have squeezed consumers’ wallets this year. Despite high crude oil prices, the pain at the pump has eased a bit.
As of Nov. 6, the national average for a gallon of gas was $4.07, down about 30 cents from a month ago, according to AAA.
But inflation is still expected to remain high.
Next week, the Bureau of Labor Statistics will release October’s inflation figures: The Consumer Price Index and the Producer Price Index.
The Cleveland Federal Reserve estimates the annual rate will hold steady at 3.7 percent. Excluding food and energy, the 12-month core inflation rate is projected to slow to 2.5 percent.
So far, underlying inflation has been tame, but November’s core data could show a sizable jump. The Cleveland Fed forecasts the annual core inflation rate climbing to 2.8 percent.
With the economy enjoying a robust labor market, the Fed may have enough room to raise interest rates without threatening growth prospects.
“The Federal Open Market Committee has the support from the job market to raise rates in December,” Roach said. “We are already hearing from several members of the Committee that rates should be higher if inflation does not improve.”
Policymakers will hold their next two-day meeting on Dec. 8 and 9. Investors widely expect the Fed to follow through on a quarter-point interest rate hike.
