By Ed Frankl
Sentiment among U.S. consumers jumped again in January, easily beating expectations as inflation expectations dip further, a striking reversal from the record low of June 2022.
The preliminary reading Friday of the University of Michigan's consumer-confidence index climbed to 78.8 points in January from 69.7 in December. Economists polled by The Wall Street Journal had expected it to increase less steeply, to 70.2.
The index reached its highest level since July 2021 and measured the largest two-month increase since 1991, after surging in December too, survey director Joanne Hsu said.
"Consumer views were supported by confidence that inflation has turned a corner and strengthening income expectations," she said.
Inflation expectations for next year fell to 2.9% from 3.1% in December, the lowest since the final month of 2020 and now tracking levels of two years prior to the pandemic. It comes after the Federal Reserve has signaled that interest-rate increases are likely over for this cycle.
For the second straight month, all five index components of the survey rose, with confidence especially improving in the short-run outlook for business conditions and in current personal finances, the data said.
Sentiment improved across age, income, education and geography, with Democrats and Republicans alike the most optimistic since the summer of 2021, Hsu said. Republicans have frequently criticized President Biden over inflation and made recent economic malaise a central plank of their pitch to voters, while the Biden administration has pointed to a strong labor market and easing inflation over the past year.
Write to Ed Frankl at edward.frankl@wsj.com
(END) Dow Jones Newswires
01-19-24 1036ET
