Consumer sentiment in the U.S. decreased by slightly more than initially estimated in the month of January, according to revised data released by the University of Michigan on Friday.
The report said the consumer sentiment index for January was downwardly revised to 79.0 from the preliminary reading of 79.2.
Economists had expected the consumer sentiment index to be unrevised from the preliminary reading, which was still down from 80.7 in December.
“The overall level of the Sentiment Index has shown only relatively small variations since the pandemic started, averaging 81.5 in 2020, marginally above January’s 79.0,” said Surveys of Consumers chief economist Richard Curtin, who acknowledged levels are well below the average of 97.0 from 2017 to 2019.
He added, “Importantly, the level of key confidence indicators remained well above prior cyclical lows despite the sudden historic collapse in economic activity.”
Curtin credited mask wearing and social distancing, the quick substitution of home for office work, and the prompt distribution of generous federal benefits for the overall stability of consumer.
“Although the nation is still being ravished by the pandemic, and the nation’s cooperative reactions have been far from perfect, consumers have helped to dissipate the potential for further harm,” Curtin said.
He continued, “Despite continuing job and income disparities, as precautionary motives begin to ease, accumulated savings will spark a significant gain in spending in late 2021.”
The report said the current economic conditions index fell to 86.7 in January from 90.0 in December, while the index of consumer expectations edged down to 74.0 from 74.6.
On the inflation front, one-year inflation expectations jumped to 3.0 percent in January from 2.5 percent in December and five-year inflation expectations rose to 2.7 percent from 2.5 percent.
The Conference Board released a separate report on Tuesday showing an unexpected improvement in U.S. consumer confidence in the month of January, reflecting an increase in optimism about the short-term economic outlook.
The Conference Board said its consumer confidence index climbed to 89.3 in January from a downwardly revised 87.1 in December.
The increase surprised economists, who had expected the index to edge down to 88.5 from the 88.6 originally reported for the previous month.
“Consumers’ appraisal of present-day conditions weakened further in January, with COVID-19 still the major suppressor,” said Lynn Franco, Senior Director of Economic Indicators at the Conference Board.
She added, “Consumers’ expectations for the economy and jobs, however, advanced further, suggesting that consumers foresee conditions improving in the not-too-distant future.”