Consumer expectations for the economy fell for the first time since July, the University of Michigan reported Friday in its monthly analysis. It fell 4% in January compared with a month earlier and was down for all income, wealth and age groups.

“Survey responses make clear that the recent partisan divergence in confidence in the economy is rooted in how consumers view Trump’s proposed policies,” Surveys of Consumers Chief Economist Joanne Hsu said in a statement. “Some consumers believe that these policies like tariffs will slow inflation to a crawl. Others believe Trump’s policies will lead inflation to roar back, and that buying now would help people avoid higher prices in the future.”

She said there has been strong spending on vehicles and at retail stores, showing consumers are acting on their beliefs.

In December, the U.S. inflation rate was 2.9% — up from 2.7% in November, according to the Bureau of Labor Statistics.

About 19% of surveyed consumers said higher tariffs will be better for the economy, compared with 62% who said lower tariffs will be better. Those who favor higher tariffs expect more economic growth and lower inflation in the future compared with those who favor lower tariffs. 

Consumers are worried that labor markets could weaken over the course of the year. The survey found 47% of consumers expect unemployment to rise in 2025 — the highest reading since the pandemic ushered in a recession in the spring and summer of 2020. The current unemployment rate is 4.1%, according to the U.S. Labor Department.

The university’s January data collection ended Monday, which was Inauguration Day. The Expectations Index fell to 69.3 in January — down from 77.1 a year earlier and 73.3 in December.