University of Michigan Reports 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 increased to a reading of 79.6 in February, up from 79.0 in January. This is a month-over-month increase of 0.8% and up 19.0% year-over-year (66.9 in February 2023).
• Current Economic Conditions declined to a reading of 81.5 in February, down from 81.9 in January. This is a month-over-month decline of 0.5% but up 21.7% year-over-year (70.7 in February 2023).
• The Index of Consumer Expectations climbed to a reading of 78.4 in February, up from 77.1 in January. This is a month-over-month increase of 1.7% and up 21.6% year-over-year (64.5 in February 2023).

In remarks and analysis prepared to accompany the release of the preliminary results, Surveys of Consumers Director Joanne Hsu said:

“Consumer sentiment was essentially unchanged from January, rising 0.6 index points this month and solidifying the large gains from the past two months. The fact that sentiment lost no ground this month suggests that consumers continue to feel more assured about the economy, confirming the considerable improvements in December and January across various aspects of the economy. Consumers continued to express confidence that the slowdown in inflation and strength in labor markets would continue. Five-year expectations for business conditions rose 5% to its highest reading since December 2020. Sentiment is currently about 30% above November 2023 and about 6% below its historical average since monthly data collection began in 1978.

Year-ahead inflation inched up from 2.9 in January to 3.0% in February. For the second consecutive month, short-run inflation expectations have fallen within the 2.3–3.0% range seen in the two years prior to the pandemic. Long-run inflation expectations remained at 2.9% for the third straight month, staying within the narrow 2.9–3.1% range for 28 of the last 31 months. Long-run inflation expectations were elevated relative to the 2.2–2.6% range seen in the two years pre-pandemic.”