Consumer sentiment lifted about 3.5 index points this month, with minor gains seen across all index components, according to the University of Michigan Surveys of Consumers.
While the overall improvement was small, it was broad-based across the population, seen across groups by income distribution, educational attainment, older and younger consumers, and Republicans and Democrats alike.
However, national sentiment remains more than 20% below a year ago, as consumers continue to report pressures on their budgets stemming from high prices and the prospect of weakening incomes, said U-M economist Joanne Hsu, director of the surveys.
"At this time, consumers do not appear to be connecting foreign developments to their views of the economy," she said. "A key exception is tariff policy, which was spontaneously mentioned by nearly 40% of consumers this month."
The interviews for this release concluded on Jan. 19, two days after President Trump's social media post announcing additional tariffs on eight countries in Europe. Overall, consumers remain focused on bread-and-butter issues, like the purchasing power of their incomes.
Despite minor improvements, views remain negative
January interviews revealed modest gains on a number of dimensions of the economy, but not enough to recover losses seen over the course of 2025. Business conditions for the year ahead as well as the long run ticked up around 6%, but both are more than 20% worse than in January 2025.
Expected income growth for the year ahead increased slightly but remains below readings seen at the end of 2024. This month, about 62% of consumers expected unemployment to worsen in the year ahead, down slightly from December's 63%.
"These dour views on labor markets are widespread, held by consumers across income groups," Hsu said. "Broadly speaking, consumers perceive some small improvements this month, but views remain much less favorable than a year ago."
Continued concern over high prices
High prices continue to weigh down the personal finances of consumers as well as buying conditions for major purchases.
About 45% of consumers spontaneously mentioned that high prices were eroding their living standards, compared with 34% a year ago. Buying conditions for major purchases, like large household durable goods and vehicles, rose slightly this month but remain relatively poor from a historical perspective, Hsu said.
High prices were the top reason mentioned by consumers. About 73% of consumers reported that it is a bad time to buy vehicles, with prices again serving as the most-mentioned reason.
Consumer Sentiment Index
The Consumer Sentiment Index rose to 56.4 in the January 2026 survey, up from 52.9 in December and below last January's 71.7. The Current Index rose to 55.4, up from 50.4 in December and below last January's 75.1. The Expectations Index rose to 57.0, up from 54.6 in December and below last January's 69.5.
About the surveys
The Surveys of Consumers is a rotating panel survey at the University of Michigan Institute for Social Research. It is based on a nationally representative sample that gives each household in the coterminous U.S. an equal probability of being selected. Interviews are conducted throughout the month by web. The minimum monthly change required for significance at the 95% level in the Sentiment Index is 4.8 points; for the Current Economic Conditions Index and Index of Consumer Expectations, the minimum is 6 points.
About ISR
Established in 1949, the Institute for Social Research at the University of Michigan is among the world's oldest social science research organizations and a world leader in the development and application of social science methodology. ISR conducts some of the most widely cited surveys and studies in the nation, including the University of Michigan Surveys of Consumers, American National Election Studies, Monitoring the Future Study, Panel Study of Income Dynamics, Health and Retirement Study, National Survey of Black Americans and World Values Survey. ISR is also home to the Inter-University Consortium for Political and Social Research, which maintains the world's largest computerized social science data archive.
