Consumer sentiment is finally on the rise, but is it too little too late? After months of deep gloom and economic dissatisfaction, households are showing signs of shaking off the despair that has gripped the United States. Consumer sentiment rose to 56.4 in January, up from 52.9 in December, according to the University of Michigan Consumer Sentiment Index. Despite this improvement, consumer sentiment is still down 21.3% from a year ago, and it's much lower than when President Donald Trump entered office with his aggressive tariff agenda.
Inflation and cost-of-living concerns are still weighing heavily on consumers, who have been grappling with the cumulative effects of years of too-high inflation, which began spiking during the pandemic recovery under Biden. Year-ahead inflation expectations fell to their lowest level since January 2025, which is good news for the economy. However, long-run inflation expectations ticked up a bit from 3.2% in December 2025 to 3.3% in January 2026, according to the survey.
The improvement in consumer sentiment is broad-based, seen across the income distribution, educational attainment, older and younger consumers, and Republicans and Democrats alike. But is it enough to boost the economy? The question remains, will this newfound optimism be enough to turn the tide for households struggling with affordability issues? And will it be enough to help Trump's approval ratings, which have been hurt by the economy's performance?
The closely watched consumer sentiment gauge has now risen for two consecutive months, showing that sentiment is starting to move in the right direction. However, it's still shockingly low, rivaling the depths seen in the aftermath of the global financial crisis and the worst of the bout of high inflation under former President Joe Biden. Despite relatively strong GDP growth, households have reported in recent months that they feel worse about the economy than they did in moments of severe recession and economic turmoil.
So, while consumer sentiment is on the rise, the question remains: is it too little too late? Will it be enough to boost the economy and help households struggling with affordability issues? And will it be enough to help Trump's approval ratings? These are the questions that remain to be answered as we continue to monitor the economic landscape.
