By Alice Seeley
On Friday, Feb. 11, a new survey from the University of Michigan revealed that U.S. consumer sentiment fell to an initial reading of 61.7 from January’s level of 67.2. This is the lowest reading since October 2011 and down 15.1 points from levels seen one year ago.
According to a Wall Street Journal survey, economists expected a reading of 67. Many believed inflation would continue to increase in the near term. University of Michigan’s Survey of Consumers’ chief economist, Richard Curtin, called February’s decline “stunning.”
“The recent declines have been driven by weakening personal financial prospects, largely due to rising inflation, less confidence in the government’s economic policies, and the least favorable long-term economic outlook in a decade,” said Curtin.
The new reading was fueled by souring sentiments among households with incomes of at least $100,000, Curtin explained.
Inflation was a major factor in the low reading. Recent data has shown that inflation is accelerating to its fastest pace since 1982. According to Curtin, one-third of surveyed adults cited higher inflation and its effect on personal finances for their weak sentiments. He added that nearly half of all adults expect their inflation-adjusted earnings to drop in the next 12 months.
Low confidence in the government also lowered the reading. According to the report, inadequate economic policy was mentioned by 51% of surveyed adults, marking the largest share since 2014. Pessimism toward government policy plagued sentiments since late 2021 when it became clear the Build Back Better plan lacked a path forward.
