Michigan consumer sentiment is brighter than expected by dpa-AFX

Michigan (dpa-AFX) – The mood of American consumers was brighter than expected at the beginning of the year. The survey of consumer sentiment in January rose to 64.6 points after 59.7 points in the previous month, the university reported on Friday after preliminary estimates. This is the highest index value since April 2022. Analysts were surprised by the strength of the increase. They only expected an index value of 60.7 points.

Thus consumer sentiment moved further from the record high of 50.0 points reached in June. In January, both the assessment of expectations and the current situation improved.

In addition, consumers’ short-term inflation expectations unexpectedly fell significantly. Over a one-year horizon, they see an inflation rate of 4.0 percent. This is the lowest level since April 2021. It was 4.4 percent in the previous month and analysts had expected a decline to 4.3 percent.

According to the survey, consumers expect an inflation rate of around three percent over the five- to ten-year horizon. However, the US Federal Reserve is targeting a rate of two percent.

The University of Michigan Index is a measure of US consumer buying behavior. It is based on a telephone survey of about 500 households. An assessment of the financial and economic situation and the corresponding expectations are queried.