Based on the Consumer Sentiment Index from the University of Michigan, there’s a noticeable uptick in anxiety among American consumers regarding President Donald Trump’s economic strategies and his foreign trade initiatives. The prospect of a trade war has dampened consumer confidence, leading to heightened expectations around inflation.
The initial reading of the UoM Sentiment Index for January showed a contraction in consumer outlook, dropping to 67.8. This decline was unexpected, as investors had predicted a rise to 71.8 from December’s mark of 71.1. This marks the lowest point in the UoM’s main sentiment index since the previous July, indicating that the average American might not be as optimistic or financially secure as Wall Street had assumed.
Furthermore, the UoM’s measures of Consumer Inflation Expectations have ticked upwards across the board. They’re predicted to reach 3.3% over the next five years and climb to 4.3% over the upcoming 12 months, largely as a result of the multiple rounds of tariff threats now affecting the consumer economy.
