US consumer sentiment increased to a five-month high in January as Americans grew more optimistic about the economy and their finances.
The final January sentiment index rose 3.5 points from a month earlier to 56.4, exceeding the preliminary reading, according to the University of Michigan. The figure surpassed all estimates in a Bloomberg survey of economists.
READ MORE:
The monthly advance in sentiment was the biggest since June and reflected gains across income, age, education and political affiliation. The share of survey respondents spontaneously mentioning tariffs has declined for five straight months, according the university.
"However, national sentiment remains more than 20% below a year ago, as consumers continue to report pressures on their purchasing power stemming from high prices and the prospect of weakening labor markets," Joanne Hsu, director of the survey, said in a statement.
Consumers expect prices to rise at an annual rate of 4% over the next year, the lowest since January 2025, data released Friday showed. And they saw costs rising at an annual rate of 3.3% over the next five to 10 years.
READ MORE:
Despite frustration over high prices, consumer spending has proved resilient and helped fuel the economy. The survey showed buying conditions for durable goods rose to a three-month high. Tax refunds for many Americans may also help alleviate some of the anxiety about household finances.
A gauge of expectations about personal finances increased this month to an almost one-year high. Views of current household finances also improved.
READ MORE:
An index measuring overall expectations rose to a six-month high, while current conditions rebounded from a record-low in December.
While consumers may have opinions about recent international developments, Hsu said "they do not appear to see meaningful consequences for their personal finances nor the US economy more generally."
The survey period includes responses from Dec. 16 to Jan. 19.
