The latest Survey of Consumers from the University of Michigan finds that consumer sentiment in January remains relatively rosy, suggesting optimism about the economy as the new year gets underway.
The Index of Consumer Sentiment, calculated by surveying consumers, currently sits at 79, a substantial increase both month-over-month (69.7 in December 2023) and year-over-year (64.9 in January 2023). As noted by Project Director Joanne Hsu, this is the highest the index has been since July 2021, reflecting increased confidence in both personal finance and macroeconomic conditions.
Inflation expectations remain in line with reporting from earlier in January. Surveyed consumers expect 2.9% inflation, down from 3.1% in December 2023 and 4.5% in November 2023.
“After reserving judgment last fall about whether the slowdown in inflation would persist, consumers now feel assured that inflation will continue to soften,” Hsu states.
If inflation does fall, that will assuredly embolden consumers even more, and could make them more bullish on spending.
The report now says that 41% of consumers expect good times ahead for business, while 48% expect challenging times. However, this figure is only deceptively negative. As recently as June 2022, 79% of consumers expected a challenging economy. The current figure is only 7% below historical trends.
For the full report, click here.
