FX.co ★ U.S. Consumer Sentiment Improves Slightly More Than Previously Estimated In January

On Friday, the University of Michigan unveiled updated figures indicating an augmentation in U.S. consumer sentiment throughout January, slightly above prior estimates.

According to the report, there was an upward adjustment of the consumer sentiment index for January to 79.0 from an initial mark of 78.8 - contrary to economists' prediction that the primary reading would hold firm.

This revision propelled the consumer sentiment index above its December statistic of 69.7, resulting in the highest number since it peaked at 81.2 in July 2021.

Joanne Hsu, Director of Surveys of Consumers, commented that the majority of 2023 saw consumers withholding judgement on whether the slowdown in inflation would be sustained. However, in the past couple of months, consumers have developed confidence that the worst economic fears are unlikely to materialize.

She emphasized that this does not suggest an overall positive sentiment among consumers regarding the economy. Almost half still anticipate a troublesome economic landscape in the upcoming year. Hsu also stated that the volatility arising from Middle Eastern conflict, along with the forthcoming election, may influence consumer perspectives in the forthcoming months.

The report further highlighted that the current economic conditions index rose significantly to 81.9 in January compared to 73.3 in December. Similarly, the index of consumer expectations climbed to 77.1 in January from 67.4 in December.

In addition, the University of Michigan found that the inflation expectations for the coming year decreased to 2.9 percent this January after falling to 3.1 percent in December - the lowest since December 2020.

However, long-term inflation expectations have remained steady at 2.9 percent, echoing the 2.9-3.1 percent range witnessed 27 times out of the past 30 months.