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The
University of Michigan's consumer sentiment index, released
Friday in a preliminary version, rose to 53.3 early this month
from a final reading of 51 in November. The index beat the 52
mark that economists had forecast but is down considerably from
71.7 in January.
Consumers' evaluation of current economic conditions slipped
slightly, but their expectations for the future brightened
somewhat.
Expectations for year-ahead inflation dipped to 4.1% from 4.5%
last month to the lowest level since January when Donald Trump
returned to the White House and began imposing sweeping taxes
tariffs on imports from countries around the world. Economists
warn that importers pay the tariffs and then try to pass along
the cost to their customers through higher prices.
Trump has reached a series of deals with major U.S. trading
partners, including the European Union and Japan, that brought
his tariffs down from the punishingly high levels he'd
threatened in the spring. Still, the average U.S. tariff rate
has climbed from 2.4% in January to 16.8% last month, highest
since 1935, according to calculations by the Budget Lab at Yale
University.
Joanne Hsu, who directs the Michigan economic surveys, said:
The overall tenor of views is broadly somber, as consumers
continue to cite the burden of high prices.″
Inflation has fallen from the highs reached in mid-2022 but
remains stubbornly above the Federal Reserve's 2% target.
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