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Preliminary results for January consumer sentiment came in below expectations, coming in at 73.2, which is below December (74.0) and still below the historical average of 84.7 (orange line) for the 43rd consecutive month. Consumer sentiment hasn’t remained above average since the inflation problem began. We had a big drop off in sentiment after COVID in 2020, started to come back shortly after but ultimately plunged to a record low after inflation really began to take hold.

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Which leads into the next part of the report; inflation expectations jumped for the second straight month (from 2.9% to 3.3%). Definitely worth keeping an eye on. Combined with services inflation and a labor market that is keeping pace, the inflation fight is far from over.

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