Consumer sentiment index rises 13 to 78.8 in January
Inflation expectations edge lower from December
Existing homes sales fall 1.0 in December; prices up

WASHINGTON, Jan 19 Reuters U.S. consumer sentiment improved in January, hitting the highest level in 212 years amid growing optimism over the outlook for inflation and household incomes, which bodes well for the economy39;s prospects this year.

The betterthanexpected reading in sentiment reported by the University of Michigan on Friday reflected a brightening of moods across all age and income groups, education and geographical locations as well as political affiliation.

It suggested that Americans were finally warming up to the economy39;s resilience after much anxiety over high inflation, which has weighed on President Joe Biden39;s popularity. Consumers39; inflation expectations over the next 12 months were the lowest in three years, good news for the Federal Reserve.

The economy is not going backwards, it is going forwards at the start of 2024, said Christopher Rupkey, chief economist at FWDBONDS in New York. For the first time, massive interest rate hikes have not put a damper on economic growth.

The University of Michigan39;s preliminary reading on the overall index of consumer sentiment came in at 78.8 this month, the highest reading since July 2021, compared to 69.7 in December. Economists polled by Reuters had forecast a preliminary reading of 70.0.

It was the second straight monthly increase and…