According to the University of Michigan’s Consumer Sentiment Index, sentiment dropped by 6.2% month-over-month in November to 50.3 points – the lowest reading in months and 29.9% lower than a year ago. The assessment of current economic conditions deteriorated even more, falling 10.8% month-over-month and 18.2% year-over-year to 52.3 points. The Consumer Expectations Index – a measure of future economic outlook – declined to 49 points, remaining below the threshold that typically signals prevailing pessimism.
Despite the decline in sentiment, inflation expectations remain relatively stable. One-year inflation expectations edged up slightly from 4.6% to 4.7%, but remain well below the May peak linked to the introduction of new energy tariffs. Encouragingly, long-term inflation expectations fell from 3.9% to 3.6%, potentially giving the Federal Reserve more flexibility in conducting monetary policy.
Wave of Layoffs Reaches Post-Pandemic High
Meanwhile, the labor market situation continues to raise concern. According to Challenger, Gray & Christmas, U.S.-based employers announced 153,074 job cuts in October, up 175% year-over-year and 183% compared to September. Since the beginning of the year, announced layoffs have exceeded 1.09 million, the highest level since 2020. Key reasons for workforce reductions include rising operational costs, weakening demand, and increased adoption of automation and artificial intelligence. Experts emphasize that individuals losing jobs now are finding it increasingly difficult to secure new employment, which could further loosen the labor market.
On a more positive note, the ADP report showed a modest increase of 42,000 private-sector jobs in October – the first positive result since July. However, as ADP’s Chief Economist Dr. Nela Richardson noted, the pace of hiring is much slower than at the start of the year, and wage growth has remained nearly flat for several months. Year-over-year wage growth stood at 4.5%, suggesting a balanced labor market, but not pointing to strong momentum.
What’s Next for the U.S. Economy?
Meanwhile, Friday’s trading session saw sharp declines across major stock indexes. The NASDAQ 100 dropped 1.9%, Dow Jones fell 0.77%, and the S&P 500 slid 1.26%. The yield on 10-year U.S. Treasuries fell to 4.073%, while the U.S. dollar index also edged lower.
