February 16, 2024

Consumers’ feelings continue to thaw toward the economy this winter, according to the latest data from the University of Michigan.

Consumer sentiment grew an astounding 0.8% in February, following a 13.1% leap in January and a sharp increase in December.

“The fact that sentiment lost no ground this month suggests that consumers continue to feel more assured about the economy, confirming the considerable improvements in December and January across various aspects of the economy,” said Joanne Hsu, director of the Surveys of Consumers.

February’s consumer sentiment reading came in at 79.6, up 0.6 points from January, and up 19% year-over-year.

Inflation expectations for the future, meaning the year ahead, rose slightly to 3%, staying within the 2.3% – 3% range seen in the two years prior to the pandemic. Long-run inflation expectations remained at 2.9% for the third month, coming in just below the 2.9% – 3.1% range seen for 26 of the last 30 months. Long-run inflation expectations remained slightly elevated from the 2.2% – 2.6% range seen in the two years pre-pandemic.

“Consumers continued to express confidence that the slowdown in inflation and strength in labor markets would continue,” continued Hsu. “Five-year expectations for business conditions rose 5% to its highest reading since December 2020. Sentiment is currently about 30% above November 2023 and about 6% below its historical average since monthly data collection began in 1978.”

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