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 Monitoring trends for over 75 years

January 2025 survey results January 24, 2025
Joanne Hsu, PhD, Director
Consumer sentiment fell for the first time in six months, edging down 4%
from December. While assessments of personal finances inched up for the
fifth consecutive month, all other index components pulled back. Indeed,
sentiment declines were broad based and seen across incomes, wealth, and
age groups. Buying conditions for durables softened but remained about
30% better than six months ago amid persistent views that purchasing now
would avoid future price increases. Despite reporting stronger incomes
this month, concerns about unemployment rose; about 47% of consumers
expect unemployment to rise in the year ahead, the highest since the
pandemic recession. January’s data closed on Inauguration Day, and
consumers of all political leanings will continue to refine their views as Trump’s policies are clarified and implemented.
Year-ahead inflation expectations soared from 2.8% last month to 3.3% this month. The current reading is the highest since
May 2024 and is above the 2.3-3.0% range seen in the two years prior to the pandemic. Long-run inflation expectations rose
from 3.0% last month to 3.2% this month, the same reading seen in November 2024. For both the short and long run,
inflation expectations rose across income and educational groups. Concerns over the future trajectory of inflation were
visible throughout the interviews and were tied to beliefs about anticipated policies like tariffs. Consumers continued to
spontaneously express motives for buying-in-advance to avoid future price increases, and robust auto and retail sales data
suggest that consumers are indeed acting on these views.
Consumers’ concerns over the path of inflation appear closely tied to their views on anticipated economic policies under
the new president. Since the election, inflation expectations have risen for Democrats and fallen for Republicans. These
trends are consistent with historical patterns. During the Trump to Biden transition, the inflation expectations of Republicans
and Democrats similarly rotated around the national average, albeit against a backdrop of sustained low inflation in the
2010s. This month’s interviews make it abundantly clear that the current divergence in inflation expectations is shaped by
beliefs about future policy, rather than a form of political expression divorced from economic factors.
In January, consumers were asked if they thought higher tariffs would be better for the economy, or if lower tariffs would
be better, or if tariff policy would make no difference for the economy. As seen in the chart, about 19% of consumers
reported higher tariffs would be better for the economy, while 62% favored lower tariffs. Strikingly, those favoring higher
tariffs had much lower inflation expectations, both year-ahead and long-run, than those favoring lower tariffs and those who
believed tariff policy has little economic impact. These patterns suggest that consumers expect Trump to hold true to his
plan to hike tariffs and have incorporated the anticipated policy change into their economic expectations.
Responses to the tariff question were not fully correlated with party affiliation; less than half of Republicans reported that
higher tariffs would be better for the economy. Younger, more-educated, or higher-income consumers were more likely to
favor lower tariffs for the economy. Note that the interview focused on the perceived impact of tariffs on the economy,
rather than the overall policy preferences of the consumer. Some consumers may believe that lower tariffs are better for the
economy but prefer higher tariffs for non-economic reasons, say as a negotiating strategy or to advance other goals.
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
2024 2024 2024 2024 2024 2024 2024 2024 2024 2024 2024 2024 2025
Index of Consumer Sentiment 79.0 76.9 79.4 77.2 69.1 68.2 66.4 67.9 70.1 70.5 71.8 74.0 71.1
Current Economic Conditions 81.9 79.4 82.5 79.0 69.6 65.9 62.7 61.3 63.3 64.9 63.9 75.1 74.0
Index of Consumer Expectations 77.1 75.2 77.4 76.0 68.8 69.6 68.8 72.1 74.4 74.1 76.9 73.3 69.3
Index Components
Personal Finances - Current 100 98 104 95 91 81 79 79 80 81 82 85 86
Personal Finances - Expected 122 116 122 116 111 106 105 108 111 110 116 111 108
Economic Outlook - 12 Months 93 93 95 92 79 84 86 88 93 92 97 88 81
Economic Outlook - 5 Years 94 92 94 96 84 88 84 92 94 95 96 94 88
Buying Conditions - Durables 111 106 109 109 88 88 81 78 82 85 82 108 104
-1
0
1
2
3
4
5
Higher Tariffs
Better for Economy
(19% of Consumers)
Lower Tariffs
Better for Economy
(62% of Consumers)
No Difference
for Economy
(19% of Consumers)
Median Inflation Expectations %
Inflation Expectations Reflect Views on Policies
Consumers who Favor Higher Tariffs Expect Lower Inflation
Year-Ahead Inflation
Expectations
Long-Run Inflation
Expectations