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US consumer sentiment drops to 7-month low as inflation worries rise

by admin February 8, 2025
February 8, 2025
US consumer sentiment drops to 7-month low as inflation worries rise

US consumer confidence weakened in early February, hitting a seven-month low as concerns over inflation and tariffs grew.

The University of Michigan’s preliminary sentiment index fell to 67.8, down 3.3 points from the previous month, missing all economist forecasts surveyed by Bloomberg.

Rising inflation expectations weigh on consumers

Short-term inflation expectations surged, with consumers now anticipating prices to rise 4.3% over the next year, a full percentage point higher than January.

Longer-term expectations also edged up, with Americans predicting a 3.3% annual increase over the next five to ten years.

The uncertainty stems from President Donald Trump’s tariff policies, which could push prices higher and dampen consumer spending.

The survey also showed a sharp 12-point decline in buying conditions for expensive items, such as appliances and vehicles, as price concerns mount.

Consumer sentiment weakened across all political affiliations.

Republican confidence dropped for the first time since August, while Democratic sentiment fell to its lowest level since 2020.

Independents also reported declining optimism.

“Republicans appear to be moderating their post-election confidence boost, while Democrats remain concerned about Trump’s economic policies,” said Joanne Hsu, director of the survey.

Job market shows signs of slowing

Adding to concerns, separate data released on Friday indicated that hiring slowed in January, with government revisions revealing that last year’s job market wasn’t as strong as initially reported.

Unemployed Americans are also taking longer to find jobs, further dampening sentiment.

The current conditions index dropped to 68.7, a three-month low, while the expectations index slid to 67.3, its weakest level since November 2023.

Additionally, expectations for personal financial situations fell to their lowest since October 2023, reflecting growing economic unease.

The post US consumer sentiment drops to 7-month low as inflation worries rise appeared first on Invezz

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