Spooked by tariffs, consumer sentiment wilts as inflation fears mount

Summary

Sentiment fell to a seven-month low as all five index components fell in February, particularly in buying conditions for durables. Year-ahead inflation expectations shot up by a full percentage point to 4.3%, only the fifth time in 14 years inflation expectations have risen so much in just one month.

Inflation fears rise as sentiment hits seven-month low

Consumer sentiment surprised to the downside in February's preliminary reading. Among 46 economists polled by Bloomberg, none expected it would be this sharp a decline. Sentiment is now at its lowest point since July 2024. The current conditions index dropped 5.3 points to 68.7, indicating consumers feel uncertain about the current state of the economy. Consumer expectations were down as well, falling 2 points to 67.3, its lowest point since December 2023.

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