U.S. Consumer Confidence Jumps Again — University of Michigan

By Ed Frankl

Sentiment among U.S. consumers climbed in January to its highest level since July 2021, amid falling inflation expectations and hopes of rising real incomes, with greater confidence appearing to be returning to the economy after recent lows.

The final reading of the consumer sentiment index rose to 79.0 in January from 69.7 in December, according to data from a survey carried out by the University of Michigan released Friday. The reading matched expectations of economists polled by The Wall Street Journal, which were a little higher than the preliminary estimate made in mid-January of 78.8.

The brighter sentiment reflects improvements in the outlook for both inflation and personal incomes, survey director Joanne Hsu said.

It marks the second month in a row in which the index has risen dramatically, after it was 61.3 in November. Confidence has gradually improved since the index hit an all-time low in June 2022 of 50.0.

Meanwhile, year-ahead inflation expectations eased in January to 2.9%, down from 3.1% in December. Earlier this week the Federal Reserve held rates but Chair Jerome Powell hinted that rate cuts are now possible, albeit not as early as the next meeting in March.

"After reserving judgment last fall about whether the slowdown in inflation would persist, consumers now feel assured that inflation will continue to soften," Hsu said.

However, consumers expressed varying opinions about the future of the economy, with 41% expecting good times in the year ahead for business conditions, while 48% expect bad times, the survey said. Still, despite the divergence, that represents an improvement on recent surveys: in June 2022, 79% expected challenging times ahead for the economy.

Write to Ed Frankl at edward.frankl@wsj.com

(END) Dow Jones Newswires

February 02, 2024 10:43 ET (15:43 GMT)

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