Rising Inflation Concerns Weigh on Consumer Sentiment
The latest University of Michigan consumer sentiment survey reveals a decline to a seven-month low, driven by pessimism over inflation.
Inflation Expectations Jump
One-year inflation expectations surged to 4.3% from 3.3% in February, reaching the highest level since November 2023. This marks two consecutive months of "unusually large" increases.
Concerns over Stagflation
Assistant economist Ruben Abargues suggests that the sharp uptick indicates consumer concerns about the potential stagflationary impact of policy plans.
Federal Reserve Perspective
Chicago Fed President Austan Goolsbee emphasizes the importance of market-based data, downplaying the survey's increase. He notes that long-run expectations remain anchored at the target.
Market-Based Measures
The 10-year breakeven inflation rate remains stable between 2% and 2.4%, providing some reassurance.
Current Conditions Index Declines
The February preliminary current conditions index dropped due to a decline in buying conditions for durables, potentially influenced by concerns over tariff policy.
January Jobs Report
The report follows the January jobs report, which showed a lower unemployment rate and solid employment gains across sectors.