Confidence rises but so do inflation expectations

The 1st look at Nov UoM confidence was slightly better than expected at 69.3 vs the consensus of 69. It’s up from 67.7 in Oct and the best reading in 5 months but remains below the best figure of the year, 76 back in June. Most of the gain was in Current Conditions which rose by 3.1 pts to 79.7 with the Economic Outlook up by less than 1 pt to 62.7. The survey captures the strong market rally of late, Fed action, the elections and the improving level of initial claims. The most interesting aspect of the report was the jump in one year inflation expectations which went from 2.7% to 3%, the most since June. This squares with the weekly news of late from companies that are raising prices to help offset the rise in their commodity costs. One of the most high profile consumer costs of them all in terms of what’s seen everyday, gasoline, is up to an average of $2.88 per gallon as of last night according to AAA. That’s a 6 month high.

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