UM consumer sentiment index rises in January

Economy,Society

  
Customers shop at a store in Queens, New York, the United States, on Jan. 12, 2023. (Photo by Ziyu Julian Zhu/Xinhua)
The recent easing of inflation boosted consumer attitudes, and consumer assessments of their personal finances surged 19 percent to its highest reading in eight months. 
CHICAGO, Jan. 27 (Xinhua) -- The Consumer Sentiment Index released Friday by the University of Michigan (UM) Surveys of Consumers rose to 64.9 in the January 2023 survey, up from 59.7 in December but below last January's 67.2.
The Current Index rose to 68.4, up from 59.4 in December but below last January's 72; and the Expectations Index rose to 62.7, up from 59.9 in December but below last January's 64.1.
The recent easing of inflation boosted consumer attitudes, and consumer assessments of their personal finances surged 19 percent to its highest reading in eight months. A still-sizable 36 percent of consumers reported that their living standards are being eroded by inflation, the lowest share since April 2022.
Consumers voiced fewer concerns over gas and food prices in January, and a declining share of consumers blamed high prices for poor buying conditions for durable goods, cars, as well as homes. However, concerns over inflation remain substantially higher than a year and a half ago prior to the onset of elevated inflation.
Consumers continued to note the growth of borrowing costs. For the third straight month, over 30 percent of consumers spontaneously mentioned high interest rates weighing down buying conditions for durables, vehicles or homes.
The share of consumers expecting further rate hikes this year fell from the all-time peak of 88 percent in April 2022 but remained high at 70 percent. While the slowdown in inflation increases the purchasing power of consumers, the continued rise in borrowing costs weighs down consumers' willingness to spend.
Customers shop at a store in Queens, New York, the United States, on Jan. 12, 2023. (Photo by Ziyu Julian Zhu/Xinhua)
Consumers' views of housing markets have also continued to worsen in the wake of rising interest rates. About 31 percent of consumers expected home prices to fall in the year ahead, the largest share since this question first appeared on the January 2007 survey.
The short-run economic outlook fell modestly from December, with two-thirds of consumers expecting an economic downturn in the year ahead, said UM economist Joanne Hsu, director of the surveys. In contrast, the long-run outlook rose 10 percent to its strongest level in nine months, though it remains 15 percent below its historical average.
"Slowing inflation provides some much-needed upward momentum for consumer sentiment," said Hsu. However, the debt ceiling debate looms ahead and could reverse the improvement in sentiment seen over the last several months. Past debt ceiling crises in 2011 and 2013 prompted steep declines in consumer confidence.
The Surveys of Consumers is a rotating panel survey based on a nationally representative sample that gives each household in the coterminous United States an equal probability of being selected. Interviews are conducted throughout the month by telephone.  ■