Tariff worries gradually receding, US consumer confidence index slightly rebounding.

With concerns about tariffs gradually receding, American consumers' views on the economic outlook have slightly improved in the recent period. On Friday, according to data released by the University of Michigan, the preliminary Consumer Confidence Index for January rose to 54, higher than December's 52.9, and also slightly higher than the median expectation of economists in the survey. The survey covered results from interviews conducted between December 16, 2024 and January 5, 2025. In terms of inflation expectations, the data shows that consumers expect a 4.2% year-on-year increase in prices in the next year, unchanged from the previous month; while long-term inflation expectations for the next 5 to 10 years have risen to 3.4%, higher than the previous 3.2%. Despite signs of a rebound in consumer confidence, high living costs, limited job opportunities, and uncertain wage growth prospects have kept overall sentiment hovering near historic lows. Meanwhile, consumer spending continues to show resilience, providing ongoing support for the US economy. Joanne Hsu, head of the University of Michigan consumer survey, stated that consumer concerns about tariffs are gradually diminishing, but their confidence in the overall business environment and labor market remains cautious. Another set of data released on the same day shows that the number of new jobs added in the US in December was lower than market expectations, indicating that the labor market remains fragile. The official report also noted that the unemployment rate fell slightly to 4.4%. The survey also shows that consumers have a weak view of the job market, with nearly two-thirds of respondents expecting the unemployment rate to rise in the next year. Among them, highly educated and high-income groups are more concerned about the risk of unemployment than other consumers. In order to prevent a rapid deterioration of the labor market, the Federal Reserve lowered interest rates consecutively at its last three monetary policy meetings in 2025. However, the market widely expects the Federal Reserve to keep interest rates unchanged at its later meeting this month in order to further observe changes in inflation and employment data. While recent price pressures have eased somewhat, overall inflation levels remain above the Federal Reserve's 2% policy target. Looking at specific indicators, the Consumer Expectations Index rose to 55, reaching a five-month high, reflecting consumers' improved views on both short-term and long-term economic prospects; while the Current Conditions Index, after hitting historic lows in December, rose to a three-month high in January. Consumers' assessment of their current financial situation has improved slightly, but their future expectations have slightly declined.