Even Americans earning over $100,000 a year are starting to lose faith in US economy
Despite rising prices, tariffs and a frozen labor market, consumer sentiment in the United States registered an uptick. According to the University of Michigan's Surveys of Consumers, the index rose to 54 from a final reading of 52.9 in December. However, there was another major shift, as people making more than $100,000 per year, who were largely optimistic about the economy, have started to have second thoughts.
The preliminary reading of 54 marked a larger increase than the 53.5 figure that the economists polled by LSEG anticipated. As per Fortune, the improvement in the index is a result of "gradually receding" tariff worries and the inflation rate remaining steady. But the positive gain was tempered by declining faith in labor markets, which is particularly a more sensitive subject for the high-income households, Surveys of Consumers Director Joanne Hsu noted. As the job market remains in a “no-hire, no-fire” state, pessimism is starting to creep into the upper echelons of the country.
Hsu further noted that while consumer confidence has declined across the board, the December results are only preliminary. However, the early findings reported that consumer sentiment declined steeply among high earners throughout last year. Between January and November 2025, consumer sentiment among the lowest and middle terciles of America fell 29.8% and 27.6% respectively, but the sentiment among the highest third of earners witnessed a steep fall of 32.1%. “While labor market expectations have essentially held steady for lower-income consumers, higher-income consumers have seen quite a bit of deterioration,” Hsu told Fortune. “Higher income, higher educated consumers are just showing increased worries about what’s happening in labor markets, she added.
While affordability concerns went up with high inflation, and the K-shaped recovery of the economy worried economists, the U.S. stock market hit record highs, posting double-digit gains for the top 10% of households who walked away with trillions in profits. This created the K-shaped inequality, and the high-earning Americans were insulated from the economic woes. However, that effect is seemingly wearing off as the new year begins, as per the publication.
According to data from the Bureau of Labor Statistics released last week, in December, nonfarm payrolls increased by only 50,000, and U.S. employers added only 584,000 jobs last year, down from 2 million in 2024. This marked the weakest annual job growth in a year outside a recession since the early 2000s. This shows an effect in the Survey data, as a weakening labor market is bad news for white-collar workers. With the hiring freeze and uncertainty around the development and implementation of Artificial Intelligence, anxiety over job loss is rampant among white-collar workers, and that fear is now showing up in the data, Fortune noted.
Apart from the labor market concerns, the year-ahead inflation expectations remained steady at 4.2% in January, the lowest reading since January 2025 but well above the month's 3.3% inflation expectation.
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