University of Michigan: Consumer sentiment rose 13% in January

Jan. 19 (UPI) -- Consumer sentiment improved dramatically in January amid confidence around improving inflation, according University of Michigan data published Friday.

The survey found consumer sentiment rose 13%, reaching its highest level since July 2021, while year-over-year consumer sentiment was up 21.4% over January 2023 levels.

"Consumer views were supported by confidence that inflation has turned a corner and strengthening income expectations. Over the last two months, sentiment has climbed a cumulative 29%, the largest two-month increase since 1991 as a recession ended," University of Michigan Surveys of Consumers Director Joanne Hsu said in a statement.

Hsu said there was a broad consensus of improved consumer sentiment across age, income, education, and geography.

According to the data Democrats and Republicans both showed their highest consumer sentiment since the summer of 2021.

"Year-ahead inflation expectations softened to 2.9% after plunging in December," Hsu added. "The current reading is the lowest since December 2020 and is now within the 2.3-3.0% range seen in the two years prior to the pandemic."

On Wednesday the U.S. Census Bureau reported December 2023 retail sales were 5.6% higher than in December 2022, with consumers appearing to be putting their dollars where their sentiment is.

Those retail results indicated a robust economy that the University of Michigan data reinforces from a consumer confidence perspective.

Hsu said consumer sentiment is now 60% higher than the all-time low it hit in June 2022 and is likely " to provide some positive momentum for the economy."