The figures: The University of Michigan reported on Friday that its second of two assessments of consumer mood in February fell to 64.7 from 67.8 earlier in the month.
This level is the lowest since November 2023. Since January, sentiment has decreased by over 10%.
The research states that Americans’ forecasts for overall inflation over the next five to ten years increased from 3.2% in January to 3.5% earlier in the month. Since May 2021, this is the biggest month-over-month increase.
Important information: The research states that a measure of consumers’ opinions on the state of affairs, which is part of the headline figure, dropped from 68.7 earlier in the month to 65.7 at the end of the month. From a value of 75.1 in January, it is now lower.
A measure of consumer expectations, the other component, fell from 67.3 in January to 64 in February. In January, it was 69.5.
Big picture: Retail sales in January were weak, which raised some questions about the strength of consumer spending in the first quarter of 2024 after strong advances in the latter part of the year.
Consumers are concerned that unemployment may increase in the upcoming year, according to detailed statistics. Their own financial situation has deteriorated.
Economists warn that attitudes do not necessarily influence how much money is spent.
According to Joanne Hsu, director of consumer surveys at the University of Michigan, there was a 19% decline in purchasing conditions for durables, largely as a result of concerns about impending tariff-induced price hikes.
“Reflecting continued disagreements on the consequences of new economic policies,” Hsu added, Republicans who were consumers reported a flat sentiment level and a little drop in inflation expectations.
Considering the future: According to Oren Klachkin, an economist at Nationwide, “we think consumers’ wallets will stay open this year as worries over economic policies are mitigated by a solid labor market.”
Market response: Early Friday trade saw a decline in the SPX index as the yield on the 10-year Treasury note, BX:TMUBMUSD10Y, dropped to 4.46%.
