Consumer confidence reaches its peak since September, but stays 25% lower than the previous year due to concerns over inflation and employment.

Consumer Confidence Sees Modest Uptick in January

In January, Americans' outlook on the economy improved slightly, reaching its highest point since September. However, overall sentiment remains subdued as concerns about inflation and a weakening job market continue to trouble workers across the country.

Despite this small gain, consumer confidence is still hovering near historic lows, marking the second consecutive month of minor improvement.

The preliminary Consumer Sentiment Index from the University of Michigan registered at 54.0 for January, a slight increase from December’s 52.9. While this surpassed economists’ expectations—Bloomberg data had forecast a rise to 53.5—it remains about 25% lower than the 71.7 recorded a year ago.

Joanne Hsu, who leads the consumer survey, shared with Yahoo Finance that, “This month’s rise was fairly modest, indicating that people have noticed some positive changes recently. Still, many anticipate ongoing economic challenges, especially regarding employment.”

Hsu also noted that, much like in December, most Americans believe unemployment will climb in the coming year. According to the latest figures from the Bureau of Labor Statistics, the unemployment rate dropped to 4.4% in December, down from November’s four-year high of 4.6%.

A customer scans fresh produce at a Walmart Supercenter in Miami Doral, Florida. (Photo by Jeffrey Greenberg/UCG via Getty Images)

Hsu further explained, “People remain primarily concerned about everyday issues such as rising costs and a less robust job market.”

She added that, while anxiety over tariffs is slowly diminishing, there is still widespread caution about the overall health of business conditions and employment opportunities.

Looking ahead, most Americans expect prices to continue climbing, with short-term inflation expectations steady at 4.2% for January.