US Consumer Sentiment Shows Modest Improvement Amid Economic Concerns

In January 2026, US consumer sentiment rose to a preliminary index of 54.0, up from 52.9 in December 2025, marking the highest level since September 2025. This increase, reported by the University of Michigan, reflects a slight improvement in economic perceptions among households, although sentiment remains nearly 25% lower than the same time last year. The survey period spanned from December 16, 2025, to January 5, 2026, and the index exceeded economists' expectations of 53.5.

US Consumer Sentiment Rises Slightly in January

Despite the uptick in sentiment, consumers continue to express concerns about high prices and a softening labor market. Year-ahead inflation expectations held steady at 4.2%, the lowest since January 2025, while long-term inflation expectations increased slightly from 3.2% to 3.4%. The labor market remains fragile, with employers adding only 50,000 jobs in December, and the unemployment rate decreasing to 4.4%. However, nearly two-thirds of consumers expect unemployment to rise in the coming year, particularly among higher-educated and higher-income groups.

US Consumer Sentiment Rises Slightly in JanuaryCityLabWashington Examiner

Joanne Hsu, director of the survey, noted that while worries about tariffs are easing, consumers remain cautious about overall business conditions and labor market strength. The sentiment index's rise was primarily driven by lower-income consumers, while higher-income households reported a decline in sentiment.

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The modest rise in consumer sentiment could have implications for the political landscape, particularly for President Donald Trump, whose approval ratings have suffered due to economic dissatisfaction. As the midterm elections approach, the administration is focusing on affordability issues to address public concerns. Despite the recent uptick in sentiment, it remains significantly below levels seen in early 2025, when the index was above 70.

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In response to the survey findings, Hsu stated, “Although consumers’ worries about tariffs appear to be gradually receding, they remain guarded about the overall strength of business conditions and labor markets.” This sentiment underscores the ongoing challenges faced by consumers as they navigate economic uncertainties.

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Critics argue that the administration's economic policies have not effectively addressed the persistent inflation and job market concerns. A PBS News/NPR/Marist poll from December 2025 indicated that 57% of respondents disapproved of President Trump's handling of the economy, reflecting widespread dissatisfaction that could impact Republican prospects in the upcoming elections.

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While the sentiment index shows improvement, it is essential to note that the overall consumer sentiment remains historically low, with a 24.7% decline compared to January 2025 levels. Additionally, the job growth figures have been revised downward, indicating a potential discrepancy in the perceived strength of the labor market.

Washington Examiner

• “All told, while consumers perceived some modest improvement in the economy over the past two months, their sentiment remains nearly 25% below last January’s reading,” — Joanne Hsu, Director of the Survey

Washington Examiner

• “Although consumers’ worries about tariffs appear to be gradually receding, they remain guarded about the overall strength of business conditions and labor markets,” — Joanne Hsu, Director of the Survey

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