Consumer sentiment in the U.S. deteriorated by less than initially estimated in the month of February, the University of Michigan revealed in a report released on Friday.
The report showed the consumer sentiment index for February was upwardly revised to 62.8 from the preliminary reading of 61.7. The upward revision surprised economists, who had expected the reading to be unrevised.
Despite the upward revision, the consumer sentiment index was still notably lower than the final January reading of 67.2 and at its lowest level since October of 2011.
“Although Consumer Sentiment posted a slight increase in the last half of February, it still remained at its lowest level in the past decade, and the loss was still entirely due to a 12.9% decline among households with incomes of $100,000 or more,” said Surveys of Consumers chief economist Richard Curtin.
He added, “The February descent resulted from inflationary declines in personal finances, a near universal awareness of rising interest rates, falling confidence in the government’s economic policies, and the most negative long term prospects for the economy in the past decade.”
The report showed the current economic conditions index fell to 68.2 in February from 72.0 in January, while the index of consumer expectations slid to 59.4 from 64.1.
On the inflation front, one-year inflation expectations were unchanged at 4.9 percent, but five-year inflation expectations edged down to 3.0 percent in February from 3.1 percent in January.
Curtin noted virtually all the interviews were conducted prior to the Russian invasion of Ukraine, so the impact was not reflected in the data.
“The most likely linkage to the domestic economy is through rising energy prices, with the size and length of the potential increases subject to substantial uncertainty,” Curtin said.
He added, “This will complicate the Fed’s policy actions, tilting their objectives to focus more on inflation at the cost of slower growth and higher unemployment.”
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