UMich Sentiment Bounces To 5-Month High As Democrats Realize Their Insane Inflation Fears Were Wrong
Having ended 2025 at the lowest Current Conditions Sentiment levels in, well, ever... expectations for preliminary January data were for a modest rebound... and it did...notably more than expected (and a pick up from the flash print):
The preliminary January sentiment index climbed to 56.4 from 52.9 in December, according to the University of Michigan (better than the 54.0 expected and 54.0 flash print).
The expectations index rose to a six-month high of 55.4. The survey reflected improvements in both the short- and long-term economic outlooks.
The current conditions gauge climbed to a three-month high after slipping to a record-low in December. Consumers’ perception of their current financial situation improved in January, while expectations declined.
Source: Bloomberg
While the overall improvement was small, UMich Survey Director Joanne Hsu admits "it was broad based, seen across the income distribution, educational attainment, older and younger consumers, and Republicans and Democrats alike."
Year-ahead inflation expectations fell back to 4.0% this month. This is the lowest reading since January 2025...
Source: Bloomberg
Uncertainty over short-run inflation expectations, as measured by the interquartile range of responses, has fallen from mid-2025 but has remained considerably elevated in recent months, comparable to levels seen in 2022
Source: Bloomberg
And it appears that Democrats have come to their senses over the fears of runaway Trump tariff inflation...
Source: Bloomberg
Aside from tariff policy, consumers do not appear to be connecting foreign developments to their views of the economy. Hsu notes that interviews for this release concluded on January 19th, two days after Trump’s social media post announcing additional tariffs on eight countries in Europe.
Tyler Durden
Fri, 01/23/2026 - 10:10
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