Improved Inflation Views Lift U.S.Sentiment to Highest Since 2021
U.S. consumers rang in the new year with a good dose of optimism about the economy, their incomes and the inflation outlook, driving a gauge of confidence to a more than two-year high.
The University of Michigan’s consumer sentiment index rose 9.1 points, the biggest monthly advance since 2005, to 78.8.
The preliminary January reading stands at the highest level since July 2021, far surpassing the most optimistic estimate in a Bloomberg survey of economists. Combined with a drop in year-ahead inflation expectations to the lowest level since the end of 2020, the spike in confidence has the potential to sustain demand and keep the economy on its expansion path.
More sanguine views about inflation may also reassure Federal Reserve officials as they consider when to begin lowering interest rates.
Source: Bloomberg, 01.19.2024
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