Consumer sentiment edged up 0.2 points month-over-month in February to 56.6, down 8.1 points from one year ago, according to final results of the University of Michigan Surveys of Consumers. The Current Economic Conditions Index increased 1.2 points from the previous month to 56.6 but down 9.1 points from the previous year. The Consumer Expectations Index edged down 0.4 points to 56.6, 7.4 points lower than the February 2025 Index.
Consumer sentiment stagnated this month with very little change, just 0.2 index points higher than January. All index components posted insignificant movements this month; overall, consumers do not perceive any material differences in the economy from last month. About 46% of consumers spontaneously mentioned high prices eroding their personal finances; readings have exceeded 40% for seven months in a row. Sentiment is about 13% below a year ago and 21% below January 2025. That said, views vary considerably across the population. A sizable month-to-month increase in sentiment for the largest stockholders was fully offset by a decline among consumers without stock holdings. Similar divergences were seen across income and education, where higher-income or college educated consumers exhibited increases in sentiment while lower-income or less-educated counterparts did not. With their much stronger income prospects and investment portfolios, wealthier and higher-income consumers feel better insulated from any possible risks to the economy.
Year-ahead inflation expectations fell from 4% last month to 3.4% this month, the lowest reading since January 2025. This month’s reading still exceeds those seen in 2024 and remains well above the 2.3-3.0% range seen in the two years pre-pandemic. Long-run inflation expectations held steady at 3.3%, just above the 2.8% and 3.2% range seen in 2024. In 2019 and 2020, long-run inflation expectations were consistently below 2.8%. Uncertainty, as measured by the middle 50% of expectations, is now its lowest since December 2024 for the short run and October 2024 for the long run.
Read the University of Michigan Surveys of Consumers release.
