American consumers are growing increasingly uneasy about President Donald Trump’s economic policies and trade strategy, according to the latest University of Michigan (UoM) Consumer Sentiment Index. Heightened fears over trade wars have weakened consumer confidence, while inflation expectations have also climbed.
Consumer Sentiment Drops to Six-Month Low
The preliminary UoM Sentiment Index fell to 67.8 in January, missing expectations of a rise to 71.8 from December’s 71.1. This marks the lowest reading since July, signaling that consumer confidence is weaker than anticipated, despite Wall Street’s more optimistic outlook.
Inflation Expectations Rise
Consumer inflation expectations increased across both short- and long-term horizons:
- One-year inflation expectations surged to 4.3%, reflecting concerns over rising costs.
- Five-year inflation expectations climbed to 3.3%, indicating growing uncertainty about long-term price stability.
Multiple rounds of tariff threats are exerting pressure on household budgets, with inflation concerns further dampening sentiment. As trade tensions persist, consumer confidence may remain under strain in the months ahead.
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