The Dow Jones (DJIA) is trading lower on Friday, despite an encouraging consumer sentiment update from the University of Michigan.
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The Consumer Sentiment Index climbed to 56.4 in January from 52.9 in the prior month, higher than the consensus estimate of 54.0. At the same time, the index is down 21% from 71.7 a year ago. A reading above 60 signals confidence, while a reading below 60 signals pessimism.
Consumer Sentiment Improves Broadly Across Demographics
Consumer sentiment increased broadly across several groups based on income, education, age, and political affiliation, said Surveys of Consumers Director Joanne Hsu.
Furthermore, consumers expect year-ahead inflation of 4.0%, which is the lowest level since January 2025 when the expectation was 3.3%. Long-run inflation expectations rose to 3.3% from 3.2%. Hsu added that consumers remain concerned about lower purchasing power from higher prices and a softening labor market.