US Consumer Confidence Rises to a Three-Month High in November as Inflation Expectations Ease; Concerns Over High Prices and AI Bubble Persist

US consumer confidence unexpectedly rebounded to a three-month high in November, mainly thanks to improved views on personal finances and the economic outlook. However, the high cost of living remains the main pressure facing American households, while recent volatility in US stocks has also sparked consumer concerns about an artificial intelligence (AI) bubble. Preliminary survey data released by the University of Michigan on Friday showed that the US consumer sentiment index rose to 51 in November from 48 in October, a three-month high and clearly better than the 48 economists expected in a Bloomberg survey. The improvement in consumer confidence was concentrated among respondents who identify as politically independent. The data showed that consumer confidence among independent voters rose to its highest level in more than a year, while confidence among Democratic and Republican supporters both declined. Despite the overall recovery in sentiment, high prices remain the top concern for US consumers. The survey showed that about 57% of respondents volunteered that persistently high prices are eroding their standard of living, the highest share since May this year. Although US corporate layoffs remain relatively limited and economic growth remains resilient, actual purchasing power for many households continues to come under pressure because prices are rising faster than wages. Previously released data showed that the US economy grew at an annualized rate of 3.4% in the third quarter, faster than market expectations and the fastest pace in a year. However, the strong macroeconomic performance has not yet fully translated into consumers feeling better about their own financial situations. High food, gasoline and housing costs have also become important issues in the US midterm elections. The Democratic Party won a clear victory in the elections, reflecting some voters' dissatisfaction with the cost of living and the overall economic situation. Inflation expectations have eased but remain at a relatively high level It is worth noting that although consumers remain dissatisfied with the current level of prices, their expectations for future inflation have improved. The survey showed that US consumers expect prices to rise 4.3% over the next year, down to a three-month low. At the same time, consumers expect average annual inflation of 3.4% over the next five to ten years, also lower than last month's level. This indicates that although households still face significant cost-of-living pressure, consumers' concerns about the pace of future price increases have eased somewhat. For the Federal Reserve, consumer inflation expectations are an important reference indicator for measuring future price pressures. The decline in short-term and long-term inflation expectations may send a positive signal, but the current level of expectations remains elevated, meaning inflation risks have not fully dissipated. US stock volatility sparks AI bubble concerns; confidence among wealthy households falls sharply In addition to inflation, recent sharp fluctuations in financial markets have also begun to affect US consumers' economic expectations. Joanne Hsu, director of the University of Michigan's consumer survey, said in a statement: "Consumers' comments show that their concerns about a possible AI bubble are intensifying." She noted that the personal finances assessment measure for the group of consumers with the largest stock portfolios fell 12% this month, hitting its lowest level since April this year. Hsu believes this may be related to stock price volatility in recent weeks. By contrast, assessments of personal finances improved modestly across other wealth groups. This divergence shows that the recent US stock market adjustment has had differing effects on different households. Consumers holding large amounts of equity assets may be more worried about their wealth situation because of market volatility, while financial confidence among other households has recovered somewhat. Recently, concerns about the scale of investment in AI and future returns have continued to intensify, and technology stocks have seen significant selling. The survey results show that this concern has begun to transmit from financial markets to consumer sentiment. Overall, however, US consumers' assessments of their personal finances have still improved. The index of consumers' current personal finances rose to a four-month high in November, and assessments of buying conditions for durable goods rebounded from a previous record low. At the same time, both measures of current economic conditions and future economic expectations rose to their highest levels since August, indicating that consumers' views of the economic environment have improved. A resilient job market supports consumer confidence Another economic data release on the same day also showed that the US labor market remains solid. US nonfarm payrolls increased by 165,000 in October, exceeding the forecasts of all economists surveyed, and the unemployment rate also edged down. Strong job growth helps sustain household income and spending power and, to some extent, supports consumers' confidence in the future economic outlook. However, despite the good performance of the job market, persistently high prices continue to limit a further recovery in consumer confidence. It should be noted that the preliminary University of Michigan consumer sentiment survey was conducted from October 20 to November 2, so it did not cover the November 3 midterm election voting day or subsequent market changes. Overall, the unexpected rebound in US consumer confidence in November shows that pessimism about personal finances and the economic outlook has eased somewhat. However, high prices continue to erode household purchasing power, and combined with AI bubble concerns and wealth-effect risks from US stock volatility, the foundation for a recovery in US consumer confidence remains fragile. For the market, the improvement in consumer confidence and the decline in inflation expectations send some positive signals, but strong job growth CKH HOLDINGS and still relatively high inflation expectations also leave the Fed's future monetary policy path facing continued uncertainty.