Consumer sentiment plummeted to a decade-low in February, due mainly to the impact of inflation among households during the month.
- The Index of Consumer Sentiment was recorded at 62.8 in February, reflecting a 6.5% decline from the 67.2 recorded in January, and an 18.2% dive from the 76.8 in February 2021. This is the lowest level in the past decade.
- The indicator of economic conditions posted a 5.3% month-on-month decline and a 20.9% year-on-year drop to 68.2, while consumer expectations fell 7.3% month-on-month and 16.0% year-on-year to 59.4.
- Chief Economist Richard Curtin attributed the decline to the impact of inflation on personal finances, a general awareness of interest rate hikes, declining confidence on economic policies, and negative long-term economic outlooks.
- Curtin also believes that consumers can amplify their precautionary behaviors should the risks attributed to the geopolitical tensions between Russia and Ukraine be endured by domestic households.
The tensions are widely expected to increase energy prices, but the size and length of the possible hikes are still uncertain.
Source: University of Michigan
