By Liz Moyer
Investing.com -- American consumers are feeling more optimistic as the new year kicks off, despite reining in spending over the holiday season amid pinched household finances.
The University of Michigan’s consumer sentiment reading for January reached its highest level since last April, at 64.9, which is higher than expectations and higher than the preliminary reading just two weeks ago.
It’s also significantly higher than the low reading of 50 reached last June amid decades-high inflation.
Consumers’ views on current conditions is also at highs not seen since April, at 68.4, up from 59.4 in December.
Other data out Friday showed inflation, as measured by the core personal consumption expenditures index, ticked down in December. The year-over-year core PCE for December rose 4.4%, in line with expectations and the lowest gain since late 2021. Core PCE, which is the Fed’s preferred inflation measure, strips out volatile prices for food and fuel.
The data comes after a holiday shopping season that turned out to be less robust than forecast. While holiday sales rose 5.3% to $936.3 billion for November and December, not adjusted for inflation, that was below the 6% to 8% increase from 2021 that had originally been forecast by the National Retail Federation.
New data on Friday showed a more than expected drop in personal spending in December, down 0.2% versus the drop of 0.1% expected. That’s the biggest drop since the revised figure for July, which also had personal spending down 0.2%.