Consumer Confidence Is Up, but Customers Are Still Watching Their Wallets

Good news: Consumer confidence actually nudged up in January. Bad news: People still feel pretty nervous about high prices and whether their jobs are safe. The latest consumer sentiment survey from the University of Michigan showed that overall optimism went up to 56.4 from 52.9 the month before. People are slightly less worried about inflation, and recent government numbers look promising. GDP growth was solid in the second half of 2025, unemployment fell slightly in December, and consumer spending accelerated to a 3.5% annual pace in the last quarter. Looking at the stats, things seem to be heading in the right direction for the economy.

But that feel-good factor is fragile. National optimism is still 20% below its level a year ago, and most people expect unemployment to rise over the next year. Concerns about what their money can actually buy are huge; almost half of households brought up high prices without prompting, saying it's hurting their quality of life. Even though inflation has come down from its high point and is now below the Federal Reserve’s 3% target for 2025, a lot of consumers haven't seen a real break in their daily costs. That’s the disconnect: people are still spending, but they haven't gotten their confidence fully back.

This mix of good and cautious news is a big deal for franchise and small business owners. People are still spending, which is boosting sales for all kinds of franchises — think everything from grabbing a bite to fixing up the house or dropping the kids off at day care. But because people are still a little nervous about money, they're being much pickier about what they buy. Things like getting good value, being easy to use, and knowing exactly what you'll get are super important when households feel a pinch. Right now, franchise brands that have simple prices, customers who trust them, and offer stuff people need every day are probably in a better spot than those selling things that are purely optional or a bit more expensive, even though the economy is getting better.

The data also underscores why many entrepreneurs continue to view franchising as a defensive growth strategy. With employment uncertainty lingering, business ownership through an established brand can look appealing to professionals seeking more control over their income. At the same time, franchisors may need to remain flexible on development pacing, financing support and unit economics as franchisees navigate higher operating costs and a consumer base that is spending — but still nervous. In short, the economy is improving, but confidence hasn’t caught up yet, and that tension will shape franchising decisions throughout 2026.

Check out the full survey here. 

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