Markets Question AI Returns as Fed Faces Data Blackout

The University of Michigan Consumer Sentiment Index (a gauge of how Americans feel about the economy and their personal finances) fell to 51.0 in November 2025, down from 53.6 in October and significantly below last November's 71.8. The Current Economic Conditions Index (measuring views of present financial situations) dropped to 51.1, its lowest level in the index's 73-year history. The decline was widespread across all demographics, driven by concerns over high prices and weakening incomes following a prolonged government shutdown. However, the Index of Consumer Expectations (forecasting future economic conditions) rose slightly to 51.0. Inflation expectations improved, with year-ahead expectations falling to 4.5% and long-run expectations declining to 3.4%.

The National Association of Home Builders (NAHB) Housing Market Index rose one point to 38 in November, marking the 19th consecutive month below the breakeven threshold of 50. Prospective buyer traffic remains deeply depressed at 26, reflecting weak demand as mortgage rates hold above 6% and job security concerns linger following the recent government shutdown. Builder response to soft demand is intensifying: 41% are now cutting prices to move inventory, the highest share in the post-Covid period. Future sales expectations dropped three points to 51, indicating builders anticipate little near-term improvement despite widespread price concessions and sales incentives.

The Federal Reserve released minutes from its October meeting showing sharp divisions about cutting rates in December. Many members prefer holding rates steady, worried that more cuts could entrench inflation or signal the Fed is abandoning its 2% target. Others say a December cut "could well be appropriate" if conditions continue as expected. The challenge: inflation remains above the Fed's 2% target, but the job market is weakening. October's meeting saw rare two-sided dissent, with one member wanting a larger cut and another opposing any cut.

The Conference Board, a non-profit research organization founded in 1916, released its Leading Economic Index (LEI) for August 2025, showing a decline of 0.5% to 98.4. The LEI combines ten economic indicators to forecast business cycle turning points, typically anticipating recessions or expansions by about seven months.

From February to August 2025, the index fell 2.8%, an annualized decline of 5.5%. Only two components advanced: stock prices and the Leading Credit Index, which measures financial market conditions. Manufacturing new orders, consumer expectations, and labor market indicators all weakened.

The Conference Board links this slowdown to higher tariffs implemented earlier in 2025, which are expected to restrain economic growth through early 2026.

Existing-home sales rose 1.2% in October to a seasonally adjusted annual rate of 4.10 million units, the highest level in eight months. Buyers responded to mortgage rates averaging 6.25% in October. The median home price reached $415,200, the 28th consecutive month of year-over-year gains. Housing inventory increased 10.9% compared to last year to 1.52 million units, though this still falls short of pre-pandemic levels. The 4.4 months of supply remains tight by historical standards.