Tariff concerns sunk consumer sentiment to a seven-month low in February, according to the University of Michigan Surveys of Consumers.
The index tracking consumer sentiment fell 4.6 percent this month to 67.8 from 71.1 in January. The index for current economic conditions fell 7.2 percent to 68.7 from 74.0 in January, while the index tracking consumer expectations slipped 3 percent from the previous month to 67.3 from 69.3.
The drop in the indexes was worsened by a 12 percent fall in buying conditions for durable goods amid ongoing tariff-related concerns. Shortly after the report was released, President Donald Trump announced 25 percent tariffs on all steel and aluminum imports into the United States. Last week, Trump postponed expected 25 percent tariffs on imports from Mexico and Canada.
Expectations for personal finances fell 6 percent from January across all political affiliations, to its lowest mark since the fall of 2023. Consumers also expressed apprehension that high inflation could return this year.
“The decrease was pervasive, with Republicans, Independents and Democrats all posting sentiment declines from January, along with consumers across age and wealth groups,” said Surveys of Consumers Director Joanne Hsu.
Year-ahead inflation projections increased to a 15-month high of 4.3 percent in February from 3.3 percent in January. Long-term inflation this month increased to 3.3 percent, which is also higher than the 2.2-2.6 percent range in the two years leading up to the pandemic.
The Conference Board Consumer Confidence Index fell 5.4 points last month to 104.1. The index based on consumer assessments of current business and labor market conditions fell nearly 10 points to 134.3. The index based on consumers’ short-term outlooks for income, business and labor market conditions dropped 2.6 points to 83.9, which was still above the threshold of 80, which signals an upcoming recession.
“Consumer confidence has been moving sideways in a relatively stable, narrow range since 2022,” said The Conference Board Chief Economist Dana Peterson. “January was no exception. The index weakened for a second straight month, but remained in that range, even if in the lower part.”