Topic to discuss developments in consumer sentiment. While consumer sentiment is very volatile, and current conditions and shocks have probably more weight on them, it can be useful to know what the consumer is thinking currently, and if recovery or deterioration is at least expected from their point of view, indicating how cautions they could be or not.
Main Article: Consumer Sentiment - InvestmentWiki
Consumer Sentiment has been deteriorating lately, and inflation expectations increasing. Still no reaching the lows in 2022.
IMO oil prices rising could have a lot of weight on their low sentiment, and the recent decline in prices could help with this short term.
Consumer sentiment slipped for the fourth straight month, falling 5% in November. While current and expected personal finances both improved modestly this month, the long-run economic outlook slid 12%, in part due to growing concerns about the negative effects of high interest rates.
Inflation expectations increasing significantly. And
Consumer confidence increased in November, following three consecutive months of decline. This improvement reflected a recovery in the Expectations Index, while the *Present Situation Index was largely unchanged.
November Consumer Confidence Index from at 102 vs. 101 est. & 99.1 in prior month (rev down from 102.6). Expectations up to 77.8 vs. 72.7 prior; present situation down to 138.2 vs. 138.6 prior.
November’s increase in consumer confidence was concentrated primarily among householders aged 55 and up; by contrast, confidence among householders aged 35-54 declined slightly.
Consumer inflation expectations declined very significantly in November, probably along with oil prices declining too.
I just saw these chart, and it is so interesting how biased sentiment is based on political affiliation. 1 of the reasons these surveys do not offer that much reality either.
I=7
@Magaly I see that you started to describe consumer sentiment indexes a bit in the Wiki but did not reach any definitive conclusion yet. Which source of consumer confidence is the most important one in your opinion?
How important is it, that the Michigan consumer index is down today?
PS: Maybe you can ask those or similar questions deep research as well + reference the full question and answers either in a “hide details” view directly here in the forum or a linked Notion page
Yes, I can do that next week going more in depth as I don’t have a definite take on which is better, and the significance of it.
My current take consumer sentiment is for me not perfect, is very noisy (all based on surveys), but it is the only way to get a bit of understanding mostly into the consumer psychology. Sometimes their perception of reality can be powerful to drive their behavior, even if the reality is actually different.
They are thinking currently a kind of stagflation scenario for them.
Some things stood out for me today:
However, These surveys are receiving a lot of critiques that it is political driven, which is true somewhat, but at the same time political independents outlook is also worsening.
Some political bias could still exist, which could make it even more noisy or unreliable now which so much division.
Alright thank you. For the future it might be better to only respond once you have a more definitive assessment. Those initial assessment provide little value to me because i have no idea how to factor them in and how to use them when thinking about e.g. Meta. (Because we don’t understand the relevance of it)
This is especially true in our new workflows focused on saving me as much time as possible and giving you as much responsibility as possible for reflection and figuring out what it means for the portfolio.
Assessment: While I think consumer confidence has lost most of its predictively as it was in the past due to news being overly negative, consumer still discontent due to the price level increase and political divisions. A sustained decline in confidence in the economy, and especially uncertainty (which is currently very high) will most likely create at least a small pullback on spending, depending on how sustained the uncertainty remains.
In particularly if we start to see declines beyond what is normal to see (which is still not particularly the case), and if we start to see more than 1 survey showing similar behavior. However, I will take stronger signal from this, when I see more signs on spending pullback on hard data.
