Consumer sentiment in the U.S. rose to a five-month high in January as Americans took a sunnier view of the economy and near-term inflation expectations declined for the fifth consecutive month.
The University of Michigan’s final January consumer sentiment index rose 3.5 points from the prior month to 56.4. Economists had expected sentiment to remain unchanged from the mid-month preliminary reading of 54. The improvement exceeded even the most optimistic forecasts in Econoday’s survey of analysts.
“While the overall improvement was small, it was broad based, seen across the income distribution, educational attainment, older and younger consumers, and Republicans and Democrats alike,” Joanne Hsu, the director of the survey, said in a statement Friday.
Expectations for inflation over the coming year fell to 4.0 percent from 4.2 percent in December. The year-ahead expectation figure has declined each month since August.
The index of current economic conditions rose to 55.4, a five point improvement from December. The index of expected conditions rose to 57.0 from 54.6.
Both Democrats and Republicans recorded improved sentiment for current conditions and the future. Independents split, with the current conditions index rising and the outlook sinking slightly. Among Republicans, the expectations gauge is now at the highest level since February, shortly after President Trump was inaugurated as president.
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