US consumer sentiment rises to four-month high on economy
Price pressures have eased somewhat, though inflation remains above the Fed’s 2% goal
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[WASHINGTON] US consumer sentiment rose in recent weeks on slightly more upbeat views about the economy as tariff concerns fade.
The preliminary January sentiment index climbed to 54 from 52.9 in December, according to the University of Michigan. The survey period includes responses from Dec 16 to Jan 5. The median estimate in a Bloomberg survey of economists called for a reading of 53.5.
Consumers expect prices to rise at an annual rate of 4.2 per cent over the next year, unchanged from a month earlier, the data showed on Friday (Jan 9). And they saw costs rising at an annual rate of 3.4 per cent over the next five to 10 years. In the previous month, they expected 3.2 per cent.
A stubbornly high cost of living, along with concerns about limited job opportunities and prospects for higher wages, has kept sentiment hovering just above a record low. At the same time, consumer spending has proved durable and helped fuel the economy.
“Although consumers’ worries about tariffs appear to be gradually receding, they remain guarded about the overall strength of business conditions and labour markets,’’ Joanne Hsu, director of the survey, said.
Separate figures out on Friday showed employers added fewer jobs in December than expected, suggesting the labour market remained fragile. The government’s report also showed the unemployment rate edged down to 4.4 per cent.
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The Michigan survey showed consumer views on the labour market remain soft, with nearly two-thirds expecting unemployment to rise in the year ahead. Concerns about joblessness have been worse among higher-educated and higher-income Americans than for other consumers.
Federal Reserve officials lowered interest rates at their last three policy meetings in 2025 to help guard against a rapid deterioration in the labour market. However, policymakers are widely expected to hold rates steady later this month as they further gauge inflation and employment data.
Price pressures have eased somewhat, though inflation remains above the Fed’s 2 per cent goal.
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The expectations index rose to a five-month high of 55. The survey reflected improvements in both the short- and long-term economic outlooks.
The current conditions gauge climbed to a three-month high after slipping to a record-low in December. Consumers’ perception of their current financial situation improved in January, while expectations declined. BLOOMBERG
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