Consumer sentiment rises above expectations in January but remains below last year's level

Consumer Sentiment - The University of Michigan's Consumer Sentiment Index increased to 54 in January from 52.9 in December, exceeding economists' expectations of 53.5 [1][2] - Despite the increase, the January reading is significantly lower than the 71.7 recorded in January 2025, indicating ongoing consumer concerns [2][7] - Improvements in sentiment were noted among lower-income consumers, while higher-income consumers reported a decline in sentiment [2] Inflation Expectations - Year-ahead inflation expectations remained steady at 4.2%, the lowest since January 2025 but still above the 3.3% expectations from that month [5] - Long-run inflation expectations slightly increased from 3.2% in December to 3.4% in January, compared to lower readings in 2024 and 2019-2020 [6] Labor Market - The U.S. economy added 50,000 jobs in December, concluding a challenging year for the labor market, which faced various headwinds [9] - Job growth in 2025 was significantly lower, with only 584,000 jobs added compared to 2 million in 2024, marking the weakest annual increase outside a recession since 2003 [11]