U.S. Consumer Sentiment Improved in January as Inflation Moderated -- University of Michigan
January 27 2023 - 10:47AM
Dow Jones News
By Xavier Fontdegloria
U.S. consumer sentiment edged up in January for a second
consecutive month, reaching its highest level since April, as
short-term inflation expectations continued to ease.
The University of Michigan said Friday that its consumer
sentiment index rose to 64.9 in January from 59.7 in December,
slightly up from its mid-month reading of 64.6.
Economists polled by The Wall Street Journal expected consumer
confidence to be unchanged from the preliminary 64.6.
January gains were driven by improving assessments of both
personal finances and buying conditions for durable goods,
supported by strong incomes and easing price pressures, said Joanne
Hsu, the survey's director.
The index measuring Americans' assessment of the current
economic conditions rose to 68.4 in January from 59.4 the prior
month, broadly in line with the preliminary reading of 68.6.
Meanwhile, the measure gauging short-term expectations increased to
62.7 from 59.9, up from the mid-month print of 62.0.
Despite recent gains, confidence remains subdued by historical
standards, highlighting the damage from still-high inflation rates
to Americans' disposable incomes and increasing concerns over a
"There are considerable downside risks to sentiment, with
two-thirds of consumers expecting an economic downturn during the
next year," Ms. Hsu said. The debt-ceiling debate could reverse the
gains registered over the last several months, as past debt-ceiling
crises in 2011 and 2013 prompted steep declines in consumer
confidence, she said.
U.S inflation slowed for the sixth straight month in December,
to 6.5%, after peaking in mid-2022. In this context, inflation
expectations also receded in January, particularly those for the
Consumers expect prices to rise 3.9% over the next year, down
from the 4.4% increase they anticipated in December, the lowest
rate since April 2021. Meanwhile, inflation expectations for the
next five years, a closely watched indicator for Federal Reserve
officials, were stable at 2.9%.
"Consumers continued to exhibit considerable uncertainty over
both long and short-term inflation expectations, indicating the
tentative nature of any declines," Ms. Hsu said.
Write to Xavier Fontdegloria at email@example.com
(END) Dow Jones Newswires
January 27, 2023 10:32 ET (15:32 GMT)
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