Consumer sentiment in the two-week period ending Monday was essentially unchanged, inching up by less than one index point from last month and sitting about 20% below its January 2025 level.
While the headline reading marked the highest level since August 2025, the recent monthly gains have been small—well within the margin of error—offering little evidence of a meaningful improvement in underlying conditions.
A closer look at the details offers even less reason for optimism. The gains in sentiment were concentrated among households with the largest stock portfolios, while confidence stagnated and remained dismal for consumers without equity exposure.
Modest improvements in assessments of personal finances and buying conditions for durable goods were offset by a slight deterioration in views on long-run business conditions.
Concerns about the erosion of purchasing power from high prices and the elevated risk of job loss remain widespread.
Sentiment also tends to move with gasoline prices. The survey suggested that consumers expect gas prices to fall over the next 12 months, but recent data on gasoline and oil prices are pointing in the opposite direction, raising questions about the durability of the improvement in confidence.
With the equity market moving sideways in recent weeks and other key assets posting some of the largest declines in years, the stock-market channel that lifted sentiment among higher-income households is unlikely to provide sustained support in the next release.
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As a result, this uptick in sentiment should be taken with a few grains of salt. In our view, it looks more like noise than a meaningful shift in trend.
Inflation expectations offer a mixed signal. Year-ahead inflation expectations fell to 3.5% from 4.0% last month, the lowest reading since January 2025, but they remain well above the 2.3% to 3.0% range seen in the two years before the pandemic.
At the same time, long-run inflation expectations edged up for a second consecutive month, to 3.4%, underscoring the risk that inflation pressures remain more entrenched than the Fed would like.
That said, over a longer horizon, sentiment remains low compared with previous periods. Things will get more complicated this year, when consumers will be facing as many tailwinds as headwinds.
