Consumer Sentiment Drops as Inflation Expectations Surge

Key Metrics:

* University of Michigan Consumer Sentiment Index: 64.7 in February (down 10% from January)
* One-year inflation expectations: 4.3% (up from 3.3% in January)
* Five-to-10-year inflation expectations: 3.5% (highest since April 1995)

Drivers of Decline:

* Uncertainty over Trump's trade policy
* Concerns over potential tariff-induced price hikes

Long-Run Inflation Expectations:

* Highest level since November 2023
* Second consecutive month of "unusually large" increases
* Consumers anticipate inflation to remain elevated over the next five years

Personal Finances and Economic Outlook:

* Expectations for personal finances and short-run economic outlook declined by almost 10% in February
* Long-run economic outlook fell by 6% (lowest since November 2023)

Impact of Trump's Tariffs:

* Tariffs on steel and aluminum imports to take effect March 12
* Additional duties on autos, chips, and pharmaceuticals expected
* Tariffs with Mexico and Canada also under consideration

Market Reaction:

* Economists cautious, as most tariff threats have yet to be implemented
* Federal Reserve minutes indicate concerns about inflation and potential tariff effects

Note: This article provides an objective summary of the University of Michigan consumer sentiment survey and related economic data. It does not offer financial advice or endorse any specific investment strategies.