U.S. Consumer Sentiment Plunges to 15-Month Low Amidst Tariff and Inflation Concerns
U.S. consumer sentiment experienced a significant decline in February, reaching a 15-month low according to the University of Michigan Surveys of Consumers. The Consumer Sentiment Index fell to 64.7 in February from 71.7 in January. This reading marks the lowest level since November 2023 and is lower than both the preliminary reading of 67.8 and the consensus forecast of 65.0 among economists surveyed by Reuters.
The decline in consumer sentiment was driven by concerns over President Donald Trump's proposed tariffs and their potential impact on household spending. Households also expressed concerns about rising inflation, which they expect to reach 4.3% over the next year, the highest level since November 2023. This is up from 3.3% last month and unchanged from the preliminary reading two weeks ago. Over the next five years, households believe inflation will average 3.5%, the highest level since 1995 and above the 3.2% anticipated in January and the preliminary reading of 3.3% from two weeks ago.