University of Michigan Releases Final Results of Its Consumer Sentiment Index for February

On Friday, the University of Michigan released the final results of its Surveys of Consumers for February.

• The Index of Consumer Sentiment declined to a reading of 64.7 in February, down from 71.1 in January. This is a month-over-month decline of 9.8% and down 15.9% year-over-year (76.9 in February 2024).
• Current Economic Conditions declined to a reading of 65.7 in February, down from 75.1 in January. This is a month-over-month decline of 12.5% and down 17.3% year-over-year (79.4 in February 2024).
• The Index of Consumer Expectations declined to a reading of 64.0 in February, down from 69.3 in January. This is a month-over-month decrease of 7.9% and down 14.9% year-over-year (75.2 in February 2024).

In remarks accompanying the report, Surveys of Consumers Director Joanne Hsu said:

“Consumer sentiment extended its early month decline, sliding nearly 10% from January. The decrease was unanimous across groups by age, income, and wealth. 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. Expectations for personal finances and the short-run economic outlook both declined almost 10% in February, while the long-run economic outlook fell back about 6% to its lowest reading since November 2023. While sentiment fell for both Democrats and Independents, it was unchanged for Republicans, reflecting continued disagreements on the consequences of new economic policies.

Year-ahead inflation expectations jumped up from 3.3% last month to 4.3% this month, the highest reading since November 2023 and marking two consecutive months of unusually large increases. The current reading is now well above the 2.3–3.0% range seen in the two years prior to the pandemic. Long-run inflation expectations rose over the course of the month and climbed from 3.2% in January to 3.5% in February. This is the largest month-over-month increase seen since May 2021. For both short- and long-run inflation expectations, this month’s increases were widespread and seen across income and age groups. Inflation expectations rose this month for Independents and Democrats alike; they fell slightly for Republicans.”