|Consumer Sentiment rose for the second straight month in January.
Why it matters: It is now at its highest level in a year but well below historical norms and far below where it was before the pandemic.
Be smart: Consumers are feeling slightly better about the economy because they are feeling better about the current level of inflation.
- Inflation has eased some in recent months, putting less strain on consumers’ budgets.
Looking ahead: While it is good news that consumers are feeling better, we have a long way to go to be at a point where we can say they feel good about the economy. In fact, June 2022 was the lowest reading ever for Consumer Sentiment and we still aren’t that much higher than that.
- Several more months of falling inflation and lower gas prices are necessary to raise sentiment to even its average historical level.