US consumer confidence rises surprisingly sharply - how does this affect inflation expectations?

US consumer confidence rises surprisingly sharply - how does this affect inflation expectations?

According to a report by finanzmarktwelt.de, US consumer confidence from the University of Michigan shows a significant increase for January. Consumer confidence is at 78.8 points, while the forecast was 70.0 and the previous month was 69.7. The assessment of the current situation is 83.3. Consumer expectations about inflation have also increased.

Inflation expectations are showing a positive development. One-year inflation expectations fell from 3.1% to 2.9%, the lowest since 2020. Expectations for inflation in five years are also 2.8%.

Joanne Hsu, who is responsible for the survey, attributes the improved consumer sentiment to confidence in falling inflation and strengthening income expectations. She highlights that consumer confidence has increased by 29% in the last two months, which is the largest increase since 1991. Additionally, all five index components have increased, particularly the near-term outlook for business conditions and current personal finances.

This positive development in consumer confidence can lead to positive dynamics for the economy. Increased consumer confidence shows that consumers are more optimistic about their financial future. This could lead to more money being spent, which could have a positive impact on the market and the financial industry.