Overview

• The University of Michigan's survey showed one-year inflation expectations rose to 3.3% in January, up from 2.8% in December, marking the highest level since May 2024.
• Long-term inflation expectations also increased to 3.3%, the highest since 2008, with notable rises among lower-income consumers and political Independents.
• Economists attribute the spike in inflation concerns to President-elect Donald Trump's proposed tariffs on imports, which many fear could drive up prices further.
• Consumer sentiment declined slightly in January, with the Michigan Consumer Sentiment Index falling to 73.2 from December's 74.0, reflecting economic uncertainty.
• The Federal Reserve faces a challenging path as inflation expectations complicate its recent rate cuts aimed at supporting economic growth.