Consumer sentiment showed minor improvements as the first month of 2026 nears its close, with expectations toward the future looking mostly positive, according to the latest data.

The University of Michigan’s latest Survey of Consumers found that the Index of Consumer Sentiment grew to 56.4 in January, up 3.5 points or 6.6% from December. The index remains down year-over-year, however, by 21.3%.

Surveys of Consumers Director Joanne Hsu stated that while this month’s increase was only a small improvement, “it was broad based, seen across the income distribution, educational attainment, older and younger consumers, and Republicans and Democrats alike.”

Despite improvement, Hsu addressed the year-over-year fall, stating that “consumers continue to report pressures on their purchasing power stemming from high prices and the prospect of weakening labor markets.”
The index of Current Economic Conditions came in at 55.4, up five points or +9.9% from last month, but down 26.2% year-over-year.

Hsu noted that foreign developments—aside from tariff policy—do not appear to be in consideration for consumers’ views of the economy right now.

As for the future, the Index of Consumer Expectations rose to 57, up 2.4 points or 4.4% from last month. The index remains down 18% year-over-year.

Inflation expectations for the year ahead receded to 4%, which Hsu noted was the “lowest reading since January 2025.” 

“Uncertainty over short-run inflation expectations, as measured by the interquartile range of responses, has fallen from mid-2025 but has remained considerably elevated in recent months, comparable to levels seen in 2022,” said Hsu.

Long-run inflation expectations, however, grew slightly from 3.2% to 3.3% this month, and are up from the 2.8% to 3.2% range seen in 2024.

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