Five-year high in latest reading; fiscal cliff worries surface
By Steve Goldstein, MarketWatch
WASHINGTON (MarketWatch) — Consumer sentiment inched up in November to the best reading in over five years, as worries about possible cuts to government spending and increases to taxes were offset about optimism for the jobs market.
Consumer sentiment in November gained slightly to a reading of 82.7 but wasn’t as strong as initially estimated, the University of Michigan and Thomson Reuters said Wednesday.
Initially, they had reported a reading of 84.9 in November from a final October reading of 82.6. Economists polled by MarketWatch had expected a downward adjustment to 84.0.
The University of Michigan reported that consumers mentioned the looming fiscal cliff when asked to identify recent economic news, and said there were only five other surveys in the past half century when more consumers spontaneously mentioned their uncertainty about government policies. Read more about the fiscal cliff
Even so, the index reached its highest level since September 2007, or just before the onset of the Great Recession. In Nov. 2011, the index, which isn’t seasonally adjusted, was just 63.7 -- a year-on-year jump of 29.8%.
Rising wages and house prices and a slowly improving jobs market have helped boost consumer sentiment. This year’s gains in the stock market also have helped. The University of Michigan said it was the most favorable outlook for the unemployment rate since 1984 — at a time when the jobless rate is 7.9%.
Hurricane Sandy didn’t appear to have too much of an impact on sentiment. The University of Michigan doesn’t provide regional breakdowns of the data.
There was a host of data released Wednesday in advance of the Thanksgiving holiday. The Labor Department reported a big drop in jobless claims to a still elevated 410,000 in the wake of Sandy. Read more on claims.
Markit said its manufacturing purchasing managers index reached a five-month high in November, possibly showing that Sandy’s wrath has helped some manufacturers who benefit from rebuilding. The Conference Board said its leading economic index edged up 0.2% in October.
Steve Goldstein is MarketWatch's Washington bureau chief. Follow him on Twitter @MKTWgoldstein.
