Consumer Sentiment Hits Low as Inflation Expectations Soar

The University of Michigan’s (UoM) Consumer Sentiment Index has revealed a decline in consumer confidence, primarily driven by rising inflation fears. The preliminary UoM Sentiment Index for January fell to 67.8, compared to investor forecasts of 71.8 and December’s reading of 71.1.

This marks the lowest point in the index since July of last year, suggesting that the average American consumer may not be as optimistic about the economy as Wall Street previously believed.

In addition to the drop in consumer confidence, the UoM Consumer Inflation Expectations also saw an increase. The 5-year inflation outlook rose to 3.3%, while the 12-month outlook jumped to 4.3%. These rising inflation expectations are likely fueled by ongoing trade tensions and tariff threats, which are impacting consumer sentiment at a broader level.