Chart of the Week: US consumer sentiment revised down after election result

While US equity markets have rallied on expectations of fiscal stimulus and deregulation, early signs of consumer sentiment remain mixed, reflecting uncertainty about the potential impact of President-elect Trump’s economic agenda on household finances. The University of Michigan’s final November consumer sentiment index rose 1.3 points from a month earlier to 71.8, data showed Friday, its highest level since April. However, this marked a downward revision from the preliminary reading of 73, based on responses collected prior to the election. Core CPI, which excludes volatile food and energy prices, held steady at 3.3% in October. However, monthly price gains of 0.3% — for the third consecutive month — signal underlying price pressures that could intensify if tariffs on foreign goods entering the US are significantly increased. Although a narrow majority of Americans polled favoured Trump’s tariff plans, they may not like the outcome. Fathom estimates that a 5 percentage point increase in the effective tariff rate on the world excluding China, plus a 30 percentage point increase in the effective tariff rate on China, will push up US inflation by one percentage point, further squeezing household budgets. We will be discussing this and more when we provide updates for the US and global economies in our Global Outlook December 2024, presented to clients this week. Charts and analysis from this forecast will be available soon via Chartbook.

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The views expressed in this article are the views of the author, not necessarily those of Refinitiv Lipper or LSEG.

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