University of Michigan Preliminary Consumer Sentiment Index for January Rises

The University of Michigan on Friday (1-13-22) released the preliminary results of its Consumer Sentiment Index (CSI) for January.

The Index of Consumer Sentiment rose to a reading of 64.6 in January, up from its reading of 59.7 in December. This is a month-over-month increase of 8.2% but down 3.9% year-over-year (67.2 in January 2022).

The Current Economic Conditions increased to a reading of 68.6 in January, up from its reading of 59.4 in December. This is a month-over-month improvement of 15.5% but down 4.7% year-over-year (72.0 in January 2022).

The Index of Consumer Expectations rose to a reading of 62.0 in January, up from its reading of 59.9 in December. This is a month-over-month increase of 3.5% but down 3.3% year-over-year (64.1 in January 2022).

In remarks and analysis prepared to accompany the release of the preliminary January Consumer Sentiment Index, Dr. Joanne Hsu, Director of Surveys for the University of Michigan, said:

“Consumer sentiment remained low from a historical perspective but continued lifting for the second consecutive month, rising 8% above December and reaching about 4% below a year ago. Current assessments of personal finances surged 16% to its highest reading in eight months on the basis of higher incomes and easing inflation. Although the short-run economic outlook fell modestly from December, the long-run outlook rose 7% to its highest level in nine months and is now 17% below its historical average.

Year-ahead inflation expectations receded for the fourth straight month, falling to 4.0% in January from 4.4% in December. The current reading is the lowest since April 2021 but remains well above the 2.3–3.0% range seen in the two years prior to the pandemic. Long-run inflation expectations were little changed from December at 3.0%, again staying within the narrow 2.9–3.1% range for 17 of the last 18 months. Long-run inflation expectations remain elevated relative to the 2.2–2.6% range seen in the two years pre-pandemic. Uncertainty over both inflation expectations measures remains high, and changes in global factors in the months ahead may generate a reversal in recent improvements.”