Reflecting a notable deterioration in expectations, the University of Michigan released a report on Friday showing an unexpected decrease in U.S. consumer sentiment in the month of February.
The University of Michigan said its consumer sentiment index fell to 76.2 in February after edging down to 79.0 in January. The drop came as a surprise to economists, who had expected the index to inch up to 80.8.
With the unexpected decrease, the consumer sentiment index slid to its lowest level since hitting 74.1 in August of 2020.
The decline by the headline index came as the index of consumer expectations slumped to 69.8 in February from 74.0 in the previous month.
The current economic conditions index showed a much more modest decrease, edging down to 86.2 in February from 86.7 in January.
Surveys of Consumers chief economist Richard Curtin said the unexpected deterioration in consumer sentiment was concentrated in expectations and among households with incomes below $75,000.
“Households with incomes in the bottom third reported significant setbacks in their current finances, with fewer of these households mentioning recent income gains than anytime since 2014,” Curtin said.
He added, “Presumably a new round of stimulus payments will reduce financial hardships among those with the lowest incomes.”
On the inflation front, the report said one-year inflation expectations jumped to 3.3 percent in February from 3.0 percent in January, while five-year inflation expectations were unchanged at 2.7 percent.