WASHINGTON (AFP) – Consumer sentiment in the United States (US) jumped 13 per cent in January to reach its highest level for almost two-and-a-half years, the University of Michigan said on Friday.
The index for consumer sentiment blew past expectations to reach 78.8 in January, according to initial estimates from the university, marking a steep rise from December, when the figure was 69.7.
The data is likely to be seen as good news for US President Joe Biden’s 2024 re-election campaign, which has been struggling to convince American consumers that he has done a good job tackling inflation while continuing to support the US economy.
But it is a tough message to sell, since good economic news in the current high interest rate environment is likely to reduce the chances of early interest rate cuts by the Federal Reserve.
The Fed is determined to sustainably lower inflation by keeping rates at a higher level, meaning borrowing costs would remain elevated for both consumers and businesses.
Jared Bernstein, who chairs the US President’s Council of Economic Advisers, called the surge in consumer sentiment “the latest sign that President Biden’s economic plan is delivering results that more Americans are feeling”.
The January figure shows that “the sharp increase in December was no fluke”, Survey of Consumers Director Joanne Hsu said in a statement, adding it was the highest level for consumer sentiment since July 2021.
“There was a broad consensus of improved sentiment across age, income, education, and geography,” she continued.
“Democrats and Republicans alike showed their most favourable readings since summer of 2021.”
Consumer views, she said, were helped by confidence that inflation has turned a corner, alongside improving income expectations.
