UoM confidence better than expected ahead of BF

The 1st look at Nov UoM confidence at 64.2 was well above estimates of 61.5, up from 60.9 in Oct and the best since June when it was 71.5. The 11 month average ytd is now 67.2. The main catalyst of improvement was in the Outlook component which rose 4.4 pts while Current Conditions were up 1.5 pts. One year inflation expectations were unchanged at 3.2% which compares to the 20 year average of 3.0%. Five year inflation expectations fell to 2.6% from 2.7% which matches the lowest since Mar ’09. Helping to keep inflation expectations relatively muted are gasoline prices which continue to lag 14% below the highs reached in May, although remain elevated at $3.44 per gallon on avg according to AAA. With crude though approaching $100 again, gasoline prices will likely start heading higher again. Bottom line, while still at sluggish levels, confidence has stabilized for now and we’ll soon see what that means for holiday sales as we’re just weeks away from Black Friday.

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