Revised data released by the University of Michigan on Friday showed consumer sentiment in the U.S. improved by slightly more than initially estimated in the month of January.
The report showed the consumer sentiment index for January was upwardly revised to 64.9 from the preliminary reading of 64.6. Economists had expected the index to be unrevised.
With the upward revision, the consumer sentiment index is well above the December reading of 59.7 and at its highest level since hitting 65.2 in April 2022.
“Consumer sentiment confirmed the preliminary January reading, remaining low from a historical perspective but continuing to lift for the second consecutive month,” said Surveys of Consumers Director Joanne Hsu.
The increase by the headline index came as the current economic conditions index surged to 68.4 in January from 59.4 in December, while the index of consumer expectations rose to 62.7 from 59.9.
“The current conditions index soared 15% above December, with improving assessments of both personal finances and buying conditions for durables, supported by strong incomes and easing price pressures,” said Hsu.
She added, “That said, there are considerable downside risks to sentiment, with two-thirds of consumers expecting an economic downturn during the next year.”
The report also showed a continued decrease in one-year inflation expectations, which tumbled to 3.9 percent in January from 4.4 percent in December, falling for the fourth straight month.
“The current reading is the lowest since April 2021 but remains well above the 2.3-3.0% range seen in the two years prior to the pandemic,” said Hsu.
Five-year inflation expectations came in unchanged at 2.9 percent, staying within the narrow 2.9-3.1 percent range for 17 of the last 18 months.
Hsu noted, “Consumers continued to exhibit considerable uncertainty over both long and short-term inflation expectations, indicating the tentative nature of any declines.”