Consumer Sentiment Rises in November: What Is It and Why Does It Matter?

Consumer sentiment, also known as consumer confidence, measures how U.S. consumers feel about the economy, wages, jobs and their personal finances.

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Written by Cara Smith
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Fact Checked

Updated Nov. 26.

Current consumer sentiment indexes:

The University of Michigan’s Index of Consumer Sentiment’s final November reading registered at 71.8, up from its October reading of 70.5, according to the survey results released on Nov. 22. The index is now up nearly 44% above its all-time historic low from June 2022. The university’s Index of Current Economic Conditions declined slightly to 63.9 in November compared to 64.9 in October, while the Index of Consumer Expectations increased to 76.9 in November compared to 74.1 in October.

The Conference Board’s Consumer Confidence Index rose to 111.7 in November, according to preliminary results released on Nov. 26. In October, the CCI was 109.6. The board’s Present Situation Index — measuring consumers’ current assessment of business and labor market conditions — increased to 140.9 in November from 136.1 in October. The Expectations Index — measuring consumers’ short-term outlook for income, business, and labor market conditions — increased to 92.3 in November, compared to 91.9 in the previous month.

What is consumer sentiment?

Consumer sentiment, also known as consumer confidence, is an index of how U.S. consumers are feeling about the current and future state of the economy, and all that folds into the economy: the job market, wages, business conditions and their personal finances. It’s a valuable tool for economists, as consumer sentiment can be used as an early predictor of economic changes.

How people feel about the economy can directly impact the economy, because consumers' attitudes often affect how much they spend on things like food, transportation, household goods, entertainment and more. In 2023, consumers’ personal spending made up 67.9% of the U.S. GDP, or gross domestic product, according to the Federal Reserve Bank of St. Louis. That’s a significant majority of the nation’s GDP, so keeping a close eye on consumer sentiment is key in foreseeing potential economic slumps or rallies.

When the economy is in a recession, consumer sentiment falls. On the flip side, when the economy is expanding, consumer sentiment rises. The index does typically peak before a recession, though. Unlike other indexes, such as the Consumer Price Index (CPI), consumer sentiment isn’t calculated using spending data or hard figures. Instead, economists rely on two major surveys of consumer confidence: The University of Michigan’s Surveys of Consumers and the Conference Board’s Consumer Confidence Survey. Each survey collects the general attitudes and opinions of hundreds of U.S. consumers. Then, those opinions are assigned numeric values and aggregated into one number, or index.

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The University of Michigan’s Index of Consumer Sentiment

The Index of Consumer Sentiment is one of three indexes derived from the University of Michigan’s Surveys of Consumers, which started in 1946. Originally conducted annually, the surveys switched to a monthly cadence in 1978. The surveys have a sample size of roughly 600 people selected randomly from the 48 adjoining U.S. states and the District of Columbia.

The surveys include roughly 50 questions covering personal finances, business conditions and buying conditions. From those surveyed, three indexes are produced: the Index of Consumer Sentiment, the Index of Consumer Expectations and the Index of Current Economic Conditions.

The Index of Consumer Sentiment is the most commonly cited index of the bunch. It’s derived from these five questions:

  1. "We are interested in how people are getting along financially these days. Would you say that you (and your family living there) are better off or worse off financially than you were a year ago?"

  2. "Now, looking ahead: Do you think that a year from now you (and your family living there) will be better off financially, or worse off, or just about the same as now?"

  3. "Now, turning to business conditions in the country as a whole. Do you think that during the next twelve months we'll have good times financially, or bad times, or what?"

  4. "Looking ahead, which would you say is more likely: that in the country as a whole we'll have continuous good times during the next five years or so, or that we will have periods of widespread unemployment or depression, or what?"

  5. "About the big things people buy for their homes, such as furniture, a refrigerator, stove, television, and things like that. Generally speaking, do you think now is a good or bad time for people to buy major household items?"

Historically, the surveys have been conducted by phone. Starting in July 2024, they'll be conducted online, with researchers aiming for 900 to 1,000 respondents.

The Conference Board’s Consumer Confidence Index

Meanwhile, the Conference Board’s Consumer Confidence Survey was launched in 1967 as a mail survey conducted every other month. Today, the survey is conducted online, on a monthly basis, with a sample size of roughly 3,000 respondents.

The Conference Board issues a five-question survey to calculate three distinct indexes: the Consumer Confidence Index, the Present Situation Index and the Expectations Index. Once the surveys have been completed, each question is given a relative value. Then, those values are compared against their relative values from 1985 — the survey’s benchmark year, with an index set at 100.

The Consumer Confidence Index is the average index for all five questions. The Present Situation Index is calculated using the average indexes for the first two questions, and the remaining three questions determine the Expectations Index.

Present Situation Index

  1. Respondents’ appraisal of current business conditions.

  2. Respondents’ appraisal of current employment conditions.

Expectations Index

  1. Respondents’ expectations regarding business conditions six months hence.

  2. Respondents’ expectations regarding employment conditions six months hence.

  3. Respondents’ expectations regarding their total family income six months hence. 

Consumer Confidence Index

This is the average index for all five questions above.

What is consumer sentiment like right now?

Final data for November from the University of Michigan released on Nov. 22 shows:

  • The Index of Consumer Sentiment rose to 71.8, up from the October reading of 70.5.

  • Current Economic Conditions registered at 63.9 in November, compared to 64.9 in October.

  • The Index of Consumer Expectations was at 76.9 in November, compared to 74.1 in October. 

Preliminary data for November from the Conference Board released on Nov. 26 shows:

  • The Consumer Confidence Index  rose to 111.7 in November, up from 109.6 in October. 

  • The Present Situation Index increased to 140.9 in November, compared to 136.1 in October. 

  • The Expectations Index, increased to 92.3 in November, compared to 91.9 October.

When does the next consumer sentiment report come out?

The University of Michigan’s next set of results for its Surveys of Consumers will be released on Friday, Dec. 6. The Conference Board will release its next Consumer Confidence Survey on Monday, Dec. 23.