According to data released on Friday, the dust on the US election has settled, consumer confidence falls short of expectations, and is lower than the initial reading before the election results were announced, reflecting serious differences between Republicans and Democrats on the outlook for the US economy after Trump won the presidential election. Furthermore, people's long-term inflation expectations have risen, reaching a phased high.

The final value of the US Consumer Confidence Index in November was 71.8. Although it was still the highest level since April of this year, it fell far short of expectations of 73.9. The initial value was 73. The initial reading was the highest since April this year.

The US November University of Michigan consumer and inflation expectations survey was conducted from October 22 to November 4. The day after that, on November 5, Americans re-elected Trump as the next president. The latest published final reading is a survey conducted after people know the election results.

According to the latest survey, the confidence index of Republicans soared to the highest level since 2021 in November, while the confidence of Democrats fell to its lowest point in more than a year. Confidence among those without political affiliations has weakened.

In terms of sub-indices, the final value of the current status index is 63.9, the expected value is 64.4, and the initial value is 64.4; the final value of the expected index is 76.9, a new high since March this year. The forecast is 79, and the initial value is 78.5.

In terms of inflation expectations that have received much attention in the market, the final value of the 1-year inflation forecast for November was 2.6%, the lowest since 2020. The market forecast was 2.7%, the initial value was 2.6%; the final value of the 5-year inflation forecast was 3.2%, the market forecast was 3.1%, and the initial value was 3.1%.

What is alarming is that the current 5-year longer-term inflation forecast is 3.2%, the highest level since November 2023. In recent years, Michigan's 5-year inflation forecast has generally fluctuated within a narrow range of 2.9%-3.1%. When US inflation was at its peak in June 2022, the initial inflation forecast reached 3.3%, the highest since 2008, drawing a lot of attention from the market. It was thought to be a sign of loosening long-term inflation expectations. However, after that, driven by violent interest rate hikes by the Federal Reserve, the 5-year inflation forecast declined, greatly alleviating concerns that inflation expectations might get out of control. Judging from the latest survey, long-term inflation expectations are once again showing signs of loosening due to Trump's election.

Consumer expectations for future financial conditions rose to the highest level in seven months in November.

Joanne Hsu, director of research at Michigan Consumer Confidence Data, said in a statement:

Ultimately, the future implementation of Trump's economic agenda remains highly uncertain, and consumers will continue to adjust their views over the next few months.

While Republicans are more optimistic about inflation, Democrats' expectations are worse than last month in several areas: inflation, personal income, overall labor market, and business conditions.

It's important to note that while many Americans hope Trump's policies will improve their financial situation, some economists warn that tariffs, expulsions of undocumented immigrants, and tax cuts could drive up inflation and slow economic growth. Furthermore, the recent US job market, inflation data, and Trump's election as president have all strengthened people's expectations that the Federal Reserve will cut interest rates in a more gradual manner. Future interest rate cuts may not be as optimistic as the survey shows.

Consumer confidence is affecting economic growth in the coming months. Pessimistic consumer sentiment will inhibit spending levels, thereby affecting economic recovery, while optimistic consumer sentiment will help the future economy.