US consumer sentiment at highest since mid-2021

Consumer sentiment rose to its highest in two and a half years in January, according to a closely watched survey released on Friday by the University of Michigan.

The consumer sentiment index, which surveys consumers on their thoughts on personal finances, business conditions and buying conditions, rose to 78.8 this month, up from 69.7 in December and higher than the 64.9 reading registered in January 2023.

This marked the highest level since July 2021, beating the consensus forecast for only a slight increase to 70.0, following the sharp jump from 61.3 in November.

The current economic conditions index increased to 83.3 from 73.3, while the consumer expectations index rose to 75.9 from 67.4.

“Consumer sentiment soared 13% in January [...] showing that the sharp increase in December was no fluke,” said Surveys of Consumers director Joanne Hsu.

“Consumer views were supported by confidence that inflation has turned a corner and strengthening income expectations. Over the last two months, sentiment has climbed a cumulative 29%, the largest two-month increase since 1991 as a recession ended.”

Meanwhile, sentiment has now risen nearly 60% above the all-time low measured in June of 2022.