January Sees Boost in Consumer Sentiment Amid Inflation and Labor Market Worries
Yardeni Research president Ed Yardeni discusses economic drivers heading into 2026 on Making Money.
Consumer sentiment has shown a slight uptick in early January, despite ongoing worries about inflation and a sluggish labor market. This information comes from the latest release by the University of Michigan’s Surveys of Consumers.
Michigan’s Consumer Sentiment Index increased to 54 in January’s preliminary reading, up from a final reading of 52.9 in December. This rise exceeded economists’ expectations, who had predicted a figure of 53.5. However, it is important to note that January’s reading remains significantly lower than the 71.7 recorded in January 2025.
According to Surveys of Consumers Director Joanne Hsu, “Improvements in January were seen among lower-income consumers, while sentiment fell for those with higher incomes.”
US ECONOMY ADDED 50K JOBS IN DECEMBER AS UNEMPLOYMENT RATE DECLINES
The University of Michigan’s consumer sentiment report rose more than expected in the preliminary reading for January. (Robert Nickelsberg/Getty Images / Getty Images)
The report also indicated that year-ahead inflation expectations remained steady at 4.2% at the start of January. This marks the lowest reading since January 2025, although it is still significantly higher than the 3.3% inflation expectations recorded in the same month last year.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| WMT | WALMART INC. | 114.53 | +1.46 | +1.29% |
| KR | THE KROGER CO. | 59.51 | -0.27 | -0.45% |
| TGT | TARGET CORP. | 105.50 | -0.82 | -0.77% |
| COST | COSTCO WHOLESALE CORP. | 924.88 | +9.57 | +1.05% |
Long-term inflation expectations among consumers have slightly increased from 3.2% in December to 3.4% this month. In comparison, these readings fluctuated between 2.8% and 3.2% throughout 2024, and remained below 2.8% during 2019 and 2020.
FURTHER RATE CUTS IN QUESTION AS FED POLICYMAKERS DEEPLY DIVIDED OVER DECEMBER CUT, MINUTES SHOW
Hsu emphasized that while consumers have perceived some modest improvements in the economy over the past two months, their sentiment remains nearly 25% lower than last January’s figures. “They continue to focus primarily on kitchen table issues, such as high prices and a softening labor market,” she explained. Although concerns about tariffs appear to be diminishing, consumers remain cautious about the overall strength of business conditions and labor markets.
Notably, over 90% of the surveys for this release were conducted prior to the capture of Venezuelan leader Nicolás Maduro by U.S. special forces on charges related to drug and weapons trafficking.
US ECONOMY EXPECTED TO GROW FASTER IN 2026 DESPITE STAGNANT JOB MARKET: GOLDMAN SACHS
The University of Michigan’s consumer sentiment report coincides with the Labor Department’s release of the closely-watched December jobs report, which indicated that the U.S. economy added 50,000 jobs last month. This modest growth marks the end of a turbulent year for the labor market, which faced challenges due to shifts in immigration policies under the previous administration, reducing the labor supply.
Businesses also navigated significant uncertainty amid the administration’s tariff policies, which underwent numerous changes following the president’s “Liberation Day” tariffs announced in April.
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According to EY-Parthenon senior economist Lydia Boussour, “In 2025, the economy added just 584,000 jobs—a stark slowdown compared to the 2 million gained in 2024 and the weakest annual increase outside a recession since 2003.”
Yardeni Research president Ed Yardeni discusses economic drivers heading into 2026 on Making Money.
Consumer sentiment has shown a slight uptick in early January, despite ongoing worries about inflation and a sluggish labor market. This information comes from the latest release by the University of Michigan’s Surveys of Consumers.
Michigan’s Consumer Sentiment Index increased to 54 in January’s preliminary reading, up from a final reading of 52.9 in December. This rise exceeded economists’ expectations, who had predicted a figure of 53.5. However, it is important to note that January’s reading remains significantly lower than the 71.7 recorded in January 2025.
According to Surveys of Consumers Director Joanne Hsu, “Improvements in January were seen among lower-income consumers, while sentiment fell for those with higher incomes.”
US ECONOMY ADDED 50K JOBS IN DECEMBER AS UNEMPLOYMENT RATE DECLINES
The University of Michigan’s consumer sentiment report rose more than expected in the preliminary reading for January. (Robert Nickelsberg/Getty Images / Getty Images)
The report also indicated that year-ahead inflation expectations remained steady at 4.2% at the start of January. This marks the lowest reading since January 2025, although it is still significantly higher than the 3.3% inflation expectations recorded in the same month last year.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| WMT | WALMART INC. | 114.53 | +1.46 | +1.29% |
| KR | THE KROGER CO. | 59.51 | -0.27 | -0.45% |
| TGT | TARGET CORP. | 105.50 | -0.82 | -0.77% |
| COST | COSTCO WHOLESALE CORP. | 924.88 | +9.57 | +1.05% |
Long-term inflation expectations among consumers have slightly increased from 3.2% in December to 3.4% this month. In comparison, these readings fluctuated between 2.8% and 3.2% throughout 2024, and remained below 2.8% during 2019 and 2020.
FURTHER RATE CUTS IN QUESTION AS FED POLICYMAKERS DEEPLY DIVIDED OVER DECEMBER CUT, MINUTES SHOW
Hsu emphasized that while consumers have perceived some modest improvements in the economy over the past two months, their sentiment remains nearly 25% lower than last January’s figures. “They continue to focus primarily on kitchen table issues, such as high prices and a softening labor market,” she explained. Although concerns about tariffs appear to be diminishing, consumers remain cautious about the overall strength of business conditions and labor markets.
Notably, over 90% of the surveys for this release were conducted prior to the capture of Venezuelan leader Nicolás Maduro by U.S. special forces on charges related to drug and weapons trafficking.
US ECONOMY EXPECTED TO GROW FASTER IN 2026 DESPITE STAGNANT JOB MARKET: GOLDMAN SACHS
The University of Michigan’s consumer sentiment report coincides with the Labor Department’s release of the closely-watched December jobs report, which indicated that the U.S. economy added 50,000 jobs last month. This modest growth marks the end of a turbulent year for the labor market, which faced challenges due to shifts in immigration policies under the previous administration, reducing the labor supply.
Businesses also navigated significant uncertainty amid the administration’s tariff policies, which underwent numerous changes following the president’s “Liberation Day” tariffs announced in April.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
According to EY-Parthenon senior economist Lydia Boussour, “In 2025, the economy added just 584,000 jobs—a stark slowdown compared to the 2 million gained in 2024 and the weakest annual increase outside a recession since 2003.”
