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U. of Michigan consumer survey: sentiment improved but uneven; tariffs lift short‑term inflation concerns
Summary
University of Michigan survey director Joanne Hsu told the revenue conference that consumer expectations improved since mid‑2022 but gains have been concentrated among higher‑income households; rising mentions of tariffs have boosted short‑term inflation expectations and prompted some purchase pull‑forward for durables and vehicles.
Joanne Hsu, director of the University of Michigan Surveys of Consumers, told the Consensus Revenue Estimating Conference that overall consumer sentiment has climbed about 50% from its June 2022 low, but the recovery is highly uneven and remains below long‑run averages.
Hsu said the upper third of the income distribution has seen roughly 70% improvement in sentiment since the trough, while the bottom third has improved only about 20%. "If you already own stocks and if you already own a house then you're really experiencing quite a bit of wealth gain," she said, explaining why higher‑income households have driven much of the recent spending strength.
Hsu flagged a rising share of consumers spontaneously mentioning tariffs in survey responses. The share rose from low single digits before the election to roughly 20% in the month after the election and about one‑third in the latest release. She said those respondents — especially Democrats and many independents — expect tariffs to pass through to consumer prices and are shifting some durable‑goods and vehicle purchases forward as a result.
"A lot of consumers are very, very concerned about a resurgence of inflation," Hsu told attendees, adding that while higher‑income households remain the main driver of aggregate spending, lower‑income families show elevated financial strain, slightly higher delinquency rates and weaker income expectations.
Hsu said the combination of stronger near‑term demand from purchase pull‑forward and elevated expectations about future prices could create inflationary psychology if broadly adopted, and she warned the dynamic is something the Federal Reserve watches as it considers the timing and pace of policy easing.
