US Consumer Sentiment Revised Down

The University of Michigan’s consumer sentiment index rose by 0.9 points to 57.3 in February 2026, marking a third consecutive monthly increase and beating market expectations of 55, according to preliminary data. Despite the improvement, sentiment remained roughly 20% below its level in January 2025. The gains were driven largely by consumers with significant stock holdings, while sentiment among households without equity exposure stagnated at depressed levels. Modest improvements in perceptions of current personal finances and buying conditions for durable goods were partly offset by a slight deterioration in long-term business expectations. Concerns over the erosion of household finances due to high prices and the risk of job losses remain widespread. On the price front, year-ahead inflation expectations fell sharply to 3.5% from 4.0% in January, the lowest level since January 2025, while longer-term inflation expectations edged up for a second month to 3.4% from 3.3%.

The University of Michigan’s consumer sentiment index was revised up to 56.4 in January 2026, from a preliminary 54.0 and December’s 52.9. This marks a second straight monthly increase and the highest reading since August, with modest gains recorded across all major components of the index. Although the improvement was incremental, it was notably broad based, spanning income levels, educational attainment, age groups, and political affiliations. That said, overall sentiment remains more than 20% below its level a year ago. Consumers continue to cite strains on purchasing power from elevated prices, alongside growing concerns about a potential softening in labor market conditions. Beyond tariff policy, foreign developments appear to have little influence on consumers’ economic perceptions. Year-ahead inflation expectations declined to 4.0%, the lowest level since January 2025, while longer-run inflation expectations edged up slightly to 3.3% from 3.2% in December.

The University of Michigan’s consumer sentiment index inched up for the second consecutive month, rising to 54.0 in January 2026, its highest level since September 2025 and slightly above market expectations of 53.5, according to a preliminary estimate. Gains were concentrated among lower-income consumers, while sentiment among higher-income households slipped. Overall, US households reported modest improvement in economic perceptions over the past two months, but sentiment remains nearly 25% below January 2025 levels. Consumers continue to worry about high prices and a softening labor market, though concerns about tariffs appear to be gradually easing. Year-ahead inflation expectations held steady at 4.2%, the lowest since January 2025, yet still well above the 3.3% recorded a year ago. Meanwhile, long-term inflation expectations ticked up slightly, rising to 3.4% from 3.2% in December.