US February Consumer Sentiment Revised Lower


The University of Michigan's consumer sentiment for the US was revised lower to 93.8 in February 2019 from a preliminary 95.5, as the bounce-back from the end of the Federal shutdown faded in late February. Still, the latest figure was above January's near two-year low of 91.2 due to a slight improvement in consumer expectations while the current economic conditions continued to deteriorate.

The index of consumer expectations stood at 84.4 in February, compared to a preliminary 86.2 and January's final 79.9. Meanwhile, the gauge for current economic conditions came in at 108.5, also below a flash estimate of 110 and the previous month's final figure of 108.8. Inflation expectations for the year ahead edged down to 2.6 percent in February (vs preliminary 2.5 percent and January's 2.7 percent) and the 5-year outlook dropped to 2.3 percent, unrevised from early estimates and against January's 2.6 percent).

"Although sentiment was still above last month's low, the bounce-back from the end of the Federal shutdown faded in late February. While the overall level of confidence remains diminished, it is still quite positive. Nonetheless, aside from last month, it was only lower in one month since Trump's election, but barely, at 93.4 in July 2017. Consumers continued to react to the Fed's pause in raising interest rates, balancing the favorable impact on borrowing costs against the negative message that the economy at present could not withstand another rate hike. Long-term inflation expectations remained near the lowest level recorded in the past half century. Among households with incomes in the top third, the reduction in inflation expectations was even greater, falling to an all-time low of just 1.9%. Upper income households also anticipated a 3.0% gain in incomes, a gain well above those with incomes in the bottom two-thirds. This meant that real income expectations among upper income households rose to the highest level since the peaks recorded in the expansions in the 1980's and 1990's (see the chart). Note that no improvement in real income expectations was observed among households with incomes in the bottom two-thirds of the income distribution. The data indicate that personal consumption expenditures will grow by 2.6% in 2019 and the strength in consumer spending will mean that the expansion is expected to set a new record length by mid year.", Surveys of Consumers chief economist, Richard Curtin, said.

US February Consumer Sentiment Revised Lower


University of Michigan | Joana Ferreira | joana.ferreira@tradingeconomics.com
3/1/2019 3:20:17 PM