The Michigan Consumer Expectations Index for November 2025 rose to 51.00, up from 50.30 in October and beating the consensus estimate of 49.00. This marks a slight recovery after a steady decline from the summer peak of 58.60 in July. The index remains well below the 12-month average of 54.30, reflecting ongoing caution among US consumers about the economic outlook.

Drivers this month

• Improved labor market conditions contributed 0.40 points to the index.
• Moderation in energy prices added 0.20 points.
• Lingering inflation concerns subtracted -0.30 points.
• Geopolitical tensions and supply chain issues weighed -0.20 points.

Policy pulse

The reading remains below the neutral 60 threshold, indicating consumers expect moderate growth but remain wary of inflation and interest rate hikes. The Federal Reserve’s ongoing restrictive stance, with the federal funds rate near 5.50%, continues to temper expectations.

Market lens

Immediate reaction: US Treasury 2-year yields rose 5 basis points post-release, reflecting a slightly hawkish tilt as consumer optimism did not accelerate enough to ease rate hike concerns. The USD index strengthened 0.30% against major currencies, while equity futures showed mild gains.

The Michigan Consumer Expectations Index is a forward-looking gauge of household sentiment on income, business conditions, and inflation over the next year. Its November print at 51.00 compares to a peak of 58.60 in July and a low of 50.30 last month, illustrating a volatile but generally downward trend since mid-2025.

Historical comparisons

• July 2025: 58.60 (peak optimism)
• October 2025: 50.30 (recent low)
• 12-month average: 54.30 (moderate optimism)

Monetary policy & financial conditions

The Federal Reserve’s restrictive monetary policy, with the federal funds rate held at 5.50%, has tightened credit conditions. This is reflected in consumer expectations, which remain subdued despite easing inflation from 6.20% YoY in mid-2025 to 4.80% in October. The yield curve remains inverted, signaling recession fears that weigh on sentiment.

Fiscal policy & government budget

Fiscal stimulus has been limited in 2025, with the government focusing on deficit reduction amid rising debt servicing costs. The lack of fresh fiscal support dampens consumer confidence, especially among lower-income households sensitive to tax and spending changes.

Drivers this month

• Labor market resilience (0.40 points)
• Energy price moderation (0.20 points)
• Inflation concerns (-0.30 points)
• Geopolitical risks (-0.20 points)

Policy pulse

The index remains below the 60 mark, signaling that consumers expect slow growth and persistent inflation pressures. This aligns with the Federal Reserve’s cautious approach to rate cuts, which remain off the table for now.

Market lens

Immediate reaction: US 2-year Treasury yields increased by 5 basis points, reflecting market expectations for continued Fed hawkishness. The USD strengthened modestly, while equity futures gained slightly on the improved sentiment.

Looking ahead, the Michigan Consumer Expectations Index suggests a mixed outlook for the US economy. Consumer sentiment is stabilizing but remains fragile amid inflation, monetary tightening, and geopolitical uncertainty.

Bullish scenario (30% probability)

• Inflation falls below 3% by mid-2026
• Fed begins rate cuts in Q2 2026
• Consumer spending accelerates, pushing the index above 60

Base scenario (50% probability)

• Inflation moderates to 4% by late 2026
• Fed holds rates steady through 2026
• Consumer expectations hover near 50–55, supporting slow growth

Bearish scenario (20% probability)

• Inflation remains sticky above 5%
• Fed tightens further, risking recession
• Consumer expectations fall below 45, signaling contraction

Structural & long-run trends

Long-term, demographic shifts and technological change are reshaping consumer behavior. Younger cohorts show more cautious spending and higher savings rates. Structural inflation pressures from supply chain realignments and energy transitions may keep expectations volatile.

The November 2025 Michigan Consumer Expectations report from the Sigmanomics database highlights a cautious but improving consumer outlook. While the index’s rise to 51.00 is encouraging, it remains below historical averages, reflecting ongoing macroeconomic headwinds. Monetary policy remains restrictive, fiscal support limited, and external risks persist. Market reactions suggest investors are pricing in a slow-growth environment with inflation risks. Policymakers should monitor these signals closely to balance growth and price stability.

Key Markets Likely to React to Michigan Consumer Expectations

The Michigan Consumer Expectations Index is a bellwether for US economic sentiment, influencing key markets. The following symbols historically track or react to shifts in consumer expectations:

• SPY – US equity ETF sensitive to consumer spending trends.
• USDCAD – Currency pair reflecting US economic strength relative to Canada.
• BTCUSD – Cryptocurrency often reacting to risk sentiment shifts.
• TLT – Long-term US Treasury ETF, sensitive to interest rate expectations.
• EURUSD – Major currency pair influenced by US economic outlook.

FAQ

What is the Michigan Consumer Expectations Index?

The Michigan Consumer Expectations Index measures household sentiment about future economic conditions, including income and inflation, over the next 12 months.

How does the index affect monetary policy?

Central banks monitor the index as a gauge of consumer confidence, which influences spending and inflation, helping guide interest rate decisions.

Why is consumer sentiment important for markets?

Consumer sentiment drives spending, a major GDP component, and influences equity, currency, and bond markets through expectations of economic growth.

Key takeaway: The November 2025 Michigan Consumer Expectations reading signals cautious optimism amid persistent inflation and monetary tightening, suggesting slow but steady economic growth ahead.