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

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

• The Index of Consumer Sentiment declined to a reading of 67.8 in February, down from 71.1 in January. This is a month-over-month decline of 4.6% and down 11.8% year-over-year (76.9 in February 2024).
• Current Economic Conditions declined to a reading of 68.7 in February, down from 74.0 in January. This is a month-over-month decline of 7.2% and down 13.5% year-over-year (79.4 in February 2024).
• The Index of Consumer Expectations declined to a reading of 67.3 in February, down from 69.3 in January. This is a month-over-month decrease of 2.9% and down 10.5 year-over-year (75.2 in February 2024).

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

“Consumer sentiment fell for the second straight month, dropping about 5% to reach its lowest reading since July 2024. The decrease was pervasive, with Republicans, Independents, and Democrats all posting sentiment declines from January, along with consumers across age and wealth groups. Furthermore, all five index components deteriorated this month, led by a 12% slide in buying conditions for durables, in part due to a perception that it may be too late to avoid the negative impact of tariff policy. Expectations for personal finances sank about 6% from last month, again seen across all political affiliations, reaching its lowest value since October 2023. Many consumers appear worried that high inflation will return within the next year. Interviews for this release concluded on February 4.

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. This is only the fifth time in 14 years we have seen such a large one-month rise (one percentage point or more) in year-ahead inflation expectations. 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 ticked up from 3.2% last month to 3.3% this month. Long-run inflation expectations remain elevated relative to the 2.2–2.6% range seen in the two years pre-pandemic.”