US Consumer Sentiment Rises, But Remains Cautious
US consumer sentiment has begun to improve in recent weeks, driven by a slightly more optimistic outlook for the economy as tariff concerns ease. However, consumers are still tempering their euphoria as the cost of living remains high and the job market is not yet considered fully robust.
An early January survey from the University of Michigan showed the sentiment index rising to 54 from 52.9 in December. The survey period covered responses from December 16 to January 5, and the result was slightly above the consensus estimate of around 53.5.
On the inflation front, one-year price increase expectations remained at 4.2%, unchanged from the previous month. However, for the longer term, five- to ten-year inflation expectations rose to 3.4% from 3.2%, indicating that long-term cost-of-living concerns have not completely dissipated.
The factors holding back sentiment remain clear: perceived “high” prices, concerns about limited job opportunities, and expectations of uneven wage increases. Nevertheless, household consumption remains resilient and is one of the engines keeping the economy running.
According to Survey Director Joanne Hsu, concerns about tariffs have begun to ease, but consumers remain wary of business and labor market conditions. The survey also showed that nearly two-thirds of respondents expect unemployment to rise in the next year—and this concern tends to be higher among educated and high-income groups.
This is in line with the latest labor data: December's job gains were lower than expected, even though the unemployment rate fell to 4.4%. Looking ahead, the market expects the Fed to hold interest rates steady for the near term while continuing to monitor two key indicators: inflation remaining above its 2% target and the strength of the labor market.
Source: Newsmaker.id
