The numbers: The University of Michigan’s gauge of consumer sentiment fell to an initial February reading of 61.7, from January’s level of 67.2, the lowest reading since October of 2011.
Economists were expecting a reading of 67, according to a Wall Street Journal survey.
Key details: Expectations for inflation over the next year rose to 5% from January’s expectation of 4.9%, the highest level since July of 2008, while inflation expectations over five years held steady at 3.1%.
Big picture: With consumer prices rising at a 40-year high of 7.5% last month, Americans remain pessimistic about their buying power, as even healthy wage gains have not kept pace with the cost of living.
What UMich said: Richard Curtin, chief economist of the survey, called February’s decline “stunning,” adding that “the recent declines have been driven by weakening personal financial prospects, largely due to rising inflation, less confidence in the government’s economic policies, and the least favorable long term economic outlook in a decade.”
“The impact of higher inflation on personal finances was spontaneously cited by one-third of all consumers, with nearly half of all consumers expecting declines in their inflation adjusted incomes during the year ahead,” he added. “In addition, fewer households cited rising net household wealth since the pandemic low in May 2020, largely due to the falling likelihood of stock price increases in 2022.”