Michigan sentiment highest since July 2021
  • Preliminary 78.8. Prior month (December) 69.7.
  • Univ of Michigan sentiment 79.0 vs 78.8 preliminary Highest level since July 2021
  • Current conditions 81.9 vs 83.3 preliminary and 73.3 prior
  • Expectations 77.1 vs 75.9 preliminary and 66.4 prior
  • 1 year inflation expectations of 2.9% versus a 2.9% preliminary 3.1% prior month
  • 5-year inflation expectations 2.9% versus 2.8% preliminary and 2.9% prior month

There has been little reaction to the data. The inflation expectations remained fairly steady. Current conditions lower vs preliminary. Expectations moved higher.

Highlights direct from the Univ. of Michigan:

  • Consumer sentiment surged 13% to its highest level since July 2021, indicating improved outlooks for inflation and personal incomes.
  • This increase in consumer sentiment in January is notable, having been exceeded only five times since 1978, with a remarkable 14% increase observed in the previous month.
  • Consumers reported positive views on their personal finances and the macroeconomy, with the short-run business outlook jumping 27%.
  • After initial skepticism last fall, consumers now feel confident that inflation will continue to soften, resuming the upward sentiment trajectory from the all-time low in June 2022.
  • Despite the overall optimism, there remains significant disagreement about the economy's future, with 41% anticipating good times ahead for business conditions and 48% expecting bad times.
  • The current sentiment is 7% below the historical average since 1978, yet it shows vast improvement from June 2022 when 79% expected challenging times.
  • Year-ahead inflation expectations decreased to 2.9%, the lowest since December 2020, and within the pre-pandemic range of 2.3-3.0%.
  • Long-run inflation expectations remained steady at 2.9%, within the narrow range of 2.9-3.1% observed for 27 of the last 30 months, but slightly higher than the pre-pandemic range of 2.2-2.6%.