Consumer Sentiment Swells Heading Toward The Holidays

Consumer sentiment is spiking going into the holiday shopping season, at 89.4 for the preliminary November reading vs October's final reading of 86.9 and preliminary reading of 86.4. Strength is led by the current conditions component which is up a very sizable 4.7 points from final September to 103.0. This offers an early indication, and a very positive indication, on the November-vs-October comparison in consumer activity. The expectations component shows less strength and less monthly acceleration but is still respectable, at 80.6 for a 1.0 point gain from final September. All these readings are the highest they've been since 2007.

Falling gasoline prices are a major factor boosting confidence but are also a major factor dragging down inflation expectations which fell 3 tenths for the 1-year outlook to 2.6 percent which is unusually low for this reading. The 5-year outlook is also at 2.6 percent for a 2 tenths decline.

Prior gains in this report, as well as the monthly consumer confidence report, offered leading indications of strength for October's retail sales report posted earlier this morning. Today's report offers new indications of future strength. The Dow is moving to opening highs in early reaction to today's report.

Recent History Of This Indicator:
The Reuter's/University of Michigan's consumer sentiment index extended its recovery-best performance in October, coming in at a final 86.9 versus 86.4 at mid-month and September's final reading of 84.6. The index is at its highest level since July 2007. A big gain in expectations led the October report, at a final 79.6 versus September's 75.4. Gains in this component point to rising confidence in the jobs outlook. The current conditions component remained especially strong and was holding near its recovery best levels where it has been for the last year.