The U.S. economy is more stable than anticipated as it moves into 2026, but growing instability in the labor market is causing concern even among a demographic that was previously among the most optimistic.
A modest increase in U.S. consumer sentiment was recorded in recent weeks, based on the University of Michigan’s January Consumer Sentiment Survey released on Friday. The index climbed to 54 from the previous month’s 52.9. According to a statement, this improvement is due to “gradually receding” concerns about tariff impacts, while expectations for inflation over the next year held at their lowest point since the previous January.
However, this slight rise in optimism was offset by a drop in confidence in the labor market, a shift that is especially significant for high-income households, stated Joanne Hsu, the economist directing the university’s research surveys. As the job market’s recent “no-hire, no-fire” pattern begins to falter, a sense of pessimism is spreading to America’s highest earners.
“Expectations for the labor market have remained largely stable for lower-income consumers, but there has been significant deterioration among higher-income consumers,” Hsu told . “Consumers with higher incomes and more education are displaying growing anxiety about developments in the labor markets.”
Although Hsu emphasized that consumer confidence has fallen universally and that the December figures are preliminary pending a final release later this month, earlier data indicated a sharp decline in sentiment among high earners during 2025. The survey categorizes responses into three income groups, with the top third of U.S. earners placed in the highest tercile. From January to November of the previous year, sentiment dropped by 29.8% for the lowest income tercile and 27.6% for the middle group, while the top third experienced a more pronounced decline of 32.1%.
Job security anxieties fuel declining sentiment
While the majority of Americans contended with inflation and increasing costs for housing, food, and electricity over the past year, high earners—who are more likely to be stockholders—may have been partially shielded. Following record highs and double-digit gains in the U.S. stock market, the wealthiest 10% of households captured a disproportionate share of new wealth generated last year. This imbalance created what some economists called a “,” where rising asset values benefited affluent consumers at the top, while escalating inflation and tariff concerns hurt those at the bottom.
In the University of Michigan’s November sentiment report, Hsu observed that a notable exception to the declining trend was among consumers with the largest stock holdings, whose optimism had actually increased that month.
Yet this positive outlook may be fading. According to a Bureau of Labor Statistics report last week, nonfarm payrolls grew by a mere 50,000 in December. The U.S. economy added only 584,000 jobs in the past year, a significant drop from the 2 million added in 2024, marking the weakest annual job growth outside of a recession since the early 2000s.
A softening labor market is a particular concern for white-collar workers. In these fields, although unemployment rates have not spiked, hiring has been largely stagnant for the past year, particularly for entry-level positions, as companies balance concerns about economic uncertainty and the impact of AI. Anxiety about job loss is widespread among white-collar employees, and this apprehension may now be reflected in the data.
In the most recent University of Michigan report, concerns about job stability over the next five years and future earning potential were “particularly elevated” among consumers with higher incomes and education levels, Hsu noted.
Other recent surveys have echoed these findings. According to an August report from the New York Federal Reserve, fears of unemployment in the coming year were most acute among the highest earners last summer. Last week, the research firm Morning Consult also reported a 10.5-point drop in sentiment among consumers earning over $100,000 annually.
“High-income consumers appeared to be thriving irrespective of surrounding conditions, but that story shifted dramatically starting at the end of December,” John Leer, Morning Consult’s chief economist, told . “In the last 10 days, we have seen the most significant drop in consumer sentiment among high-income consumers since the pandemic.”
Update, January 12, 2026: This article has been updated with a comment from Morning Consult.