#USConsumerConfidence In January 2025, U.S. consumer confidence experienced a decline, marking the first decrease in six months. The University of Michigan's Consumer Sentiment Index fell to 71.1 from December's 74.0, contrary to economists' expectations of stability. This downturn was observed across various demographics, with 47% of consumers anticipating higher unemployment rates—the highest percentage since the pandemic-induced recession.

Concurrently, one-year inflation expectations rose to 3.3% from December's 2.8%, surpassing the pre-pandemic range of 2.3%-3.0%. Long-term inflation expectations also increased slightly to 3.2% from December's 3.0%. These heightened concerns are partly attributed to anticipated tariff policies under President Donald Trump's administration.

Despite these challenges, U.S. consumers have demonstrated resilience. Retail sales during the 2024 holiday season reached $994 billion, a 4% increase from the previous year. This robust spending contributed to higher earnings for major U.S. banks in the fourth quarter, with notable increases in credit card expenditures on products from retailers like Target and Costco. Analysts note that while consumers are cautious and deliberate in their spending, there is no significant indication of reduced expenditure, even amid rising credit card delinquency rates and elevated interest rates.

In summary, while there is a noted decline in consumer confidence and rising inflation expectations, U.S. consumers continue to exhibit strength in their spending habits, playing a crucial role in sustaining economic growth.