U.S. Consumer Sentiment Weakens in January

WASHINGTON (Reuters) – U.S. consumer sentiment weakened in January for the first time in six months amid worries about the labor market and potential higher prices for goods if President Donald Trump’s new administration presses ahead with planned tariffs on imports.

The University of Michigan reported that its Consumer Sentiment Index fell to 71.1 this month from a preliminary reading of 73.2 and 74.0 in December. Economists polled by Reuters had expected an unchanged reading. The final survey was closed on Monday, coinciding with Trump’s inauguration for a second term as president.

The decline in sentiment was broad-based, affecting various income, wealth, and age groups.

> “Despite reporting stronger incomes this month, concerns about unemployment rose,” said Joanne Hsu, director of the University of Michigan’s Surveys of Consumers. “About 47% of consumers expect unemployment to rise in the year ahead, the highest since the pandemic recession.”

Consumers’ one-year inflation expectations stood at 3.3%, unchanged from the preliminary estimate, but up from 2.8% in December. The 12-month inflation expectations now exceed the 2.3%-3.0% range observed during the two years leading up to the COVID-19 pandemic.

Long-run inflation expectations were at 3.2%, revised down from a preliminary reading of 3.3% and increased from 3.0% in December.

> “Concerns over the future trajectory of inflation were visible throughout the interviews and were tied to beliefs about anticipated policies like tariffs,” Hsu added.