The University of Michigan’s consumer sentiment index inched up for the second consecutive month, rising to 54.0 in January 2026, its highest level since September 2025 and slightly above market expectations of 53.5, according to a preliminary estimate. Gains were concentrated among lower-income consumers, while sentiment among higher-income households slipped. Overall, US households reported modest improvement in economic perceptions over the past two months, but sentiment remains nearly 25% below January 2025 levels. Consumers continue to worry about high prices and a softening labor market, though concerns about tariffs appear to be gradually easing. Year-ahead inflation expectations held steady at 4.2%, the lowest since January 2025, yet still well above the 3.3% recorded a year ago. Meanwhile, long-term inflation expectations ticked up slightly, rising to 3.4% from 3.2% in December.
