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U.S. Consumer Sentiment Plunges To Lowest Level Since November 2023
(RTTNews) - A report released by the University of Michigan on Friday showed consumer sentiment in the U.S. deteriorated by much more than previously estimated in the month of February.
The University of Michigan said its consumer sentiment index for February was downwardly revised to 64.7 from a preliminary reading of 67.8. Economists had expected the index to be unrevised.
With the unexpected downward revision, the consumer sentiment index is well below the January reading of 71.7, tumbling to its lowest level since hitting 61.3 in November 2023.
"All five index components deteriorated this month, led by a 19% plunge in buying conditions for durables, in large part due to fears that tariff-induced price increases are imminent," said Surveys of Consumers Director Joanne Hsu.
She added, "While sentiment fell for both Democrats and Independents, it was unchanged for Republicans, reflecting continued disagreements on the consequences of new economic policies."
The substantial deterioration by consumer sentiment came amid a surge by year-ahead inflation expectations, which spiked to 4.3 percent in February from 3.3 percent in January, reaching the highest level since November 2023.
Long-run inflation expectations also rose to 3.5 percent in February from 3.2 percent in January, reflecting the largest month-over-month increase since May 2021.
"For both short- and long-run inflation expectations, this month's increases were widespread and seen across income and age groups," said Hsu. "Inflation expectations rose this month for Independents and Democrats alike; they fell slightly for Republicans."
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