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U.S. consumer sentiment cooled more than forecast in January, adding to signs consumers may be growing less optimistic as vaccinations roll out amid soaring new infections.
The University of Michigan’s preliminary sentiment index fell to 79.2 from 80.7 last month, data released Jan. 15 showed. The figure fell below the forecast in Bloomberg’s survey of economists that had called for a slight pullback to 79.5.
The gauge of current conditions fell 2.3 points to 87.7, while a measure of expectations dropped 0.8 point to 73.8, according to the survey conducted Jan. 2-13.
The slightly more downbeat sentiment reading signals that consumers may be starting the year with less faith in the economic recovery as soaring virus cases lead to new restrictions just as inoculations become more available. Nearly 1 million Americans filed for unemployment benefits last week after the biggest jump in claims since March, a report showed Jan. 14.
The report also showed inflation expectations picking up. Consumers expect a year-ahead inflation rate of 3%, the highest since August, up from 2.5% readings both last month and a year earlier. The five-year estimate rose to 2.7% from 2.5%.
A separate report earlier Jan. 15 showed that retail sales decreased 0.7% in December from the prior month, the latest indication that the new year may face a shaky start. Meanwhile, more support may be on the way: President-elect Joe Biden said Jan. 14 he will ask Congress for $1.9 trillion to fund immediate relief for the economy.
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