University of Michigan Releases the Final Results of Its Consumer Sentiment Index for January

On Friday, the University of Michigan released the final results of its Surveys of Consumers for January.

• The Index of Consumer Sentiment declined to a reading of 71.1 in January, down from 74.0 in December. This is a month-over-month decline of 3.9% and down 10.0% year-over-year (79.0 in January 2024).
• Current Economic Conditions declined to a reading of 74.0 in January, down from 75.1 in December. This is a month-over-month decline of 1.1% and down 9.6% year-over-year (81.9 in January 2024).
• The Index of Consumer Expectations declined to a reading of 69.3 in January, down from 73.3 in December. This is a month-over-month decrease of 5.5% and down 10.1 year-over-year (77.1 in January 2024).

Adding background and analysis to the report, Surveys of Consumers Director Joanne Hsu said:

“Consumer sentiment fell for the first time in six months, edging down 4% from December. While assessments of personal finances inched up for the fifth consecutive month, all other index components pulled back. Indeed, sentiment declines were broad based and seen across incomes, wealth, and age groups. Buying conditions for durables softened but remained about 30% better than six months ago amid persistent views that purchasing now would avoid future price increases. Despite reporting stronger incomes this month, concerns about unemployment rose; about 47% of consumers expect unemployment to rise in the year ahead, the highest since the pandemic recession. January’s data closed on Inauguration Day, and consumers of all political leanings will continue to refine their views as Trump’s policies are clarified and implemented.

Year-ahead inflation expectations soared from 2.8% last month to 3.3% this month. The current reading is the highest since May 2024 and is above the 2.3–3.0% range seen in the two years prior to the pandemic. Long-run inflation expectations rose from 3.0% last month to 3.2% this month, the same reading seen in November 2024. For both the short and long run, inflation expectations rose across income and educational groups. Concerns over the future trajectory of inflation were visible throughout the interviews and were tied to beliefs about anticipated policies like tariffs. Consumers continued to spontaneously express motives for buying-in-advance to avoid future price increases, and robust auto and retail sales data suggest that consumers are indeed acting on these views.”