Michigan consumer sentiment fell 4%, marking the first decline in six months, as economic concerns over inflation, tariffs, and labor market uncertainties grow.

Consumer Sentiment Decline Hits Six-Month Low in Michigan

ANN ARBOR, Mich. — Consumer sentiment has dropped for the first time in six months, decreasing by 4% from December, according to a new University of Michigan survey. The decline reflects rising concerns about economic uncertainty, inflation, and the potential effects of President Donald Trump’s proposed policies.

Economic Confidence Shaken Amid Tariff Disagreements

The study, conducted by the University of Michigan’s Surveys of Consumers, found that 62% of respondents believe lower tariffs would benefit the economy, while 19% favor higher tariffs, and another 19% think tariffs have little impact. These results highlight growing divisions over economic policy and its implications for Michigan consumers.

Survey director Joanne Hsu noted that the latest sentiment drop is largely driven by partisan expectations regarding Trump’s policy plans. “Some consumers believe these policies, like tariffs, will slow inflation to a crawl. Others believe Trump’s policies will lead inflation to roar back,” Hsu said. The uncertainty has led many consumers to adjust their spending habits in anticipation of economic changes.

Rising Inflation Fears Lead to Increased Spending

Despite declining sentiment, buying conditions for durable goods remain strong, up 30% compared to six months ago. Many consumers are making purchases now to avoid expected price hikes, indicating that inflation concerns are pushing immediate spending behavior.

“This pattern suggests that consumers expect Trump to hold true to his plan to hike tariffs and have incorporated the anticipated policy change into their economic expectations,” Hsu explained.

Job Market Concerns Grow Among Michigan Consumers

While personal finance assessments have remained stable, worries about job security have increased. According to the survey, 47% of respondents expect unemployment to rise in the coming year, the highest percentage since the pandemic recession. Concerns over wages and job stability could further dampen consumer confidence in the months ahead.

Expectations for income growth have also weakened, reinforcing concerns that economic uncertainty could impact household financial planning.

The Consumer Sentiment Index and What It Means

The Consumer Sentiment Index fell to 71.1 in January, down from 74.0 in December. The Current Index dropped slightly to 74.0, while the Expectations Index declined to 69.3. These numbers indicate increasing pessimism about both short- and long-term economic conditions among Michigan residents.

About the Survey

The survey, conducted monthly by the University of Michigan’s Institute for Social Research, is a nationally representative study that assesses economic confidence and spending behavior.

The Surveys of Consumers, a rotating panel survey at the University of Michigan Institute for Social Research, is conducted using a nationally representative sample where each household in the contiguous U.S. has an equal chance of participation. Interviews are carried out online throughout the month. A minimum monthly change of 4.8 points is needed for significance at the 95% level in the Sentiment Index, while for the Current Index and Expectations Index, the minimum required change is 6 points.

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