Consumer Sentiment Fell 0.6% in January

Ann Arbor, MI, February 1, 2016—Consumer sentiment fell to 92.0 in January, down 0.6% from December’s 92.6.

Year over year, it fell 6.2% from January 2015’s 98.1.

“Consumer confidence has remained largely unchanged, as the January reading was just 0.6% below last month's level,” said Survey of Consumers’ chief economist, Richard Curtin. “The small downward revisions were due to stock market declines that were reflected in the erosion of household wealth, as well as weakened prospects for the national economy. The interviews conducted from last Friday until early this week provide no evidence that the East Coast blizzard influenced the data. To be sure, the overall level of confidence is below last January's peak, but thus far, the decline amounts to just 6.2%, indicating slower growth, not a recession in 2016. Consumers anticipate that the growth slowdown will be accompanied by smaller wage gains and slight increases in unemployment by the end of 2016. Importantly, favorable financial prospects have become dependent on very low inflation. The Fed's success at pushing the inflation rate higher may well exceed wage gains, thus erasing a critical strength in consumers' financial expectations. Consumers will actively demonstrate their resistance by moderating their purchases in the face of price hikes, thus acting to offset the Fed's rationale for higher rates.”