American consumer confidence decreased in January for the first time in six months due to concern for unemployment and the impact of possible tariffs on inflation.
The January final trusted index descended to a minimum of three months of 71.1, in front of the reading of December 74, According to the University of Michigan. The decrease from the preliminary figure of January 73.2 included the lowest level of confidence since August 2020 among voters described as Democrats.
Consumers expect prices to rise to an annual rate of 3.2% over the next five to ten years, compared to 3% planned in December. According to data published this Friday, consumers expect costs to increase 3.3% during the next year, the highest figure since May.
Many economists have warned that tariffs could make prices upload, which could affect both confidence and consumer demand when applied. The Trump administration is confident that a decrease in energy prices will help mitigate any increase in price level.
The survey also revealed that consumers indicated that they were buying in advance to avoid future price increases.
The labor market, although it is still resilient, has also become a reason for concern in recent months, since unemployed Americans take longer to find work. At the same time, Trump has promised to reduce the size of the federal workforce, which could affect the areas with a high concentration of federal workers.
“Although income has increased this month, concern for unemployment has increased; About 47 % of consumers expect unemployment to increase in next year, the highest figure from the pandemic recession ”, Joanne Hsu, director of the survey, said in a statement.
The current conditions dropped to 74 this month, from 75.1 in December, while that of expectations fell to a minimum of six months of 69.3.
The consumers’ prospects on their financial situation decreased to the lowest level in five months.
The perception of consumers continued to vary depending on political ideologies after Trump’s electoral victory in November. While the Democrats became more pessimistic, an indicator of trust among the Republicans rose to the highest level since October 2020. Among the independents, the level of trust decreased.
