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US consumer sentiment unexpectedly improved in November, reaching a three month high as Americans reported modestly better views of personal finances and the broader economic outlook. The increase exceeded economists’ expectations and was driven by stronger sentiment among independents.

The University of Michigan’s preliminary sentiment index climbed to 51 in November from 48 in October, according to survey results released Friday. Economists surveyed by Bloomberg had expected the index to remain unchanged at 48.

The improvement was concentrated among independents, whose sentiment reached its strongest level in more than a year. That gain came as sentiment among both Democrats and Republicans deteriorated during the month.

Despite the increase in the headline reading, the cost of living remained a major concern for households. About 57% of respondents spontaneously said high prices had eroded their living standards, the largest share since May.

Household finances have remained under pressure as prices rise faster than wages, even with limited layoffs and strong economic growth. The survey showed that Americans continued to feel the consequences of elevated prices in their personal finances.

Economic frustration also surfaced in the midterm elections, where Democrats secured a decisive victory. Voter dissatisfaction centered particularly on the high cost of food, gasoline and housing, according to the source.

Consumers became somewhat less pessimistic about inflation over the coming year, although their expectations remained elevated. Respondents said they expected prices to rise 4.3% during the next year, marking a three month low.

Longer range inflation expectations also declined from the prior month. Consumers projected that costs would increase at an annual rate of 3.4% over the next five to 10 years.

Inflation was not the only source of unease in the survey responses. Joanne Hsu, director of the survey, said, “consumers' comments revealed growing anxiety over a possible AI bubble,” reflecting another concern identified during the survey period.

Hsu also pointed to a deterioration in personal finance sentiment among people with the biggest stock holdings. The movement contrasted with modest improvements recorded across every other wealth group covered by the survey.

“The personal finances of consumers with the largest stock portfolios dropped 12% this month to their lowest reading since April, likely due to agitation in stock values in recent weeks, while all other wealth groups saw modest improvements,” she added.

A measure of current personal finances rose to a four month high in November. That increase helped support the broader improvement in consumer sentiment, even as households continued to report significant pressure from high prices.

Americans also became more positive about buying conditions for durable goods. That gauge rebounded after previously falling to a record low, adding another area of improvement within the November results.

Measures tracking both current conditions and expected conditions advanced to their highest readings since August. Together, those gains showed that the improvement extended beyond only one component of the overall sentiment report.

The survey gathered responses from Oct. 20 through Nov. 2. Its results captured a modest improvement in the public mood while also documenting persistent concerns about living costs, inflation and stock values.

November’s increase therefore came with clear divisions among consumers. Independents supplied the central boost, while Democrats and Republicans grew more pessimistic and respondents with the largest stock portfolios reported a sharp deterioration in their personal finances.

DISCLAIMER: GoldInvestors.news is not a registered investment, legal or tax advisor or broker/dealer. All investment/financial opinions expressed by GoldInvestors.news are from the personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors and misprints may occur.