U.S. consumer sentiment improved in early November, though concerns over the higher cost of living remained and households worried about a possible artificial intelligence bubble, a survey showed on Friday.
The University of Michigan's Surveys of Consumers said its Consumer Sentiment Index rose to 51.0 this month from a final reading of 48.0 in October. Economists polled by Reuters had forecast the index would be unchanged at 48.0.
The improvement in sentiment was concentrated among respondents identifying as Independents. The survey was conducted between October 20 and November 2, a period that ended on the eve of Tuesday's midterm elections, in which anger over inflation stemming from tariffs on imports and the U.S.-Israeli war resulted in President Donald Trump's Republican Party losing control of Congress to Democrats.
"While sentiment lifted for lower- and middle-wealth consumers, it fell 5% for those with the largest stock portfolios in the wake of a relatively turbulent period in stock markets," said Joanne Hsu, the director of the Surveys of Consumers. "Moreover, consumers' comments revealed growing anxiety over a possible AI bubble."
The survey's measure of consumer expectations for inflation over the next year fell to 4.3% from 4.7% last month. Consumers' expectations for inflation over the next five years dipped to 3.4% from 3.5% in October.
The reading offers a mixed picture for the economy: households feel somewhat better about their own finances and the outlook for prices, but the anxiety over stretched stock valuations — and the sharp market selloff that followed the midterm results — suggests confidence remains fragile as the holiday shopping season approaches.
