Consumer sentiment fell last month after reaching a 2 1/2 year high in January, according to the University of Michigan Surveys of Consumers.
The index for consumer sentiment fell two index points in February to 76.9, one month after climbing 13 percent to 79 in January. That was its highest mark since July 2021 as consumers expressed improved outlooks on inflation and personal incomes.
The index for current economic conditions fell to 79.4 from 81.9 in January, which was still 12 percent higher than 70.7 a year ago. The index of consumer expectations fell 2.5 percent to 75.2 in February from 77.1 in January, but was still 16.6 percent higher than 64.5 in February 2023. Expected short- and long-term consumer expectations were 63 percent and 46 percent higher, respectively, than November.
Year-ahead inflation expectations increased to 3 percent in February from 2.9 percent in January. Long-term inflation expectations remained at 2.9 percent for the third straight month, slightly higher than the 2.2 percent to 2.6 percent range in the two years before the pandemic.
“Consumers perceived few changes in the state of the economy since the start of the new year, and they appear to be assured that inflation will continue on a favorable trajectory” said Surveys of Consumers Director Joanne Hsu. “Sentiment is currently eight points shy of the historical average since 1978.”
The Conference Board Consumer Confidence Index fell to 106.7 from 110.9 in January, after three straight months of increases. The index based on consumers’ assessments of current business and labor market conditions fell to 147.2 from 154.9 in January. The index based on consumers’ short-term outlook for income, business and labor market conditions fell to 79.8 from 81.5.
Chief Economist Dana Peterson said the decreases in outlooks reflected “persistent uncertainty about the US economy. The drop in confidence was broad-based, affecting all income groups except households earning less than $15,000 and those earning more than $125,000. Confidence deteriorated for consumers under the age of 35 and those 55 and over, whereas it improved slightly for those aged 35 to 54.”