Americans grew more pessimistic in February as inflation fears surged and economic confidence weakened.
U.S. consumer confidence tumbled to a 15-month low in February, as inflation fears surged and expectations for both the broader economy and personal finances deteriorated.
The University of Michigan’s consumer sentiment index, released on Feb. 21, dropped to 64.7 in February, down from 71.7 in January, marking the lowest level since November 2023. The final reading represented a downside surprise, coming in below both the preliminary estimate of 67.8 and economists’ expectations, signaling greater pessimism among consumers.
All components of consumer sentiment declined, with buying conditions for durable goods plunging 19 percent, largely due to concerns over tariff-driven price hikes. Expectations for personal finances and the short-term economic outlook fell nearly 10 percent, while the long-term outlook hit its lowest level since November 2023.
Inflation expectations also rose sharply, fueled by fears that President Donald Trump’s plans for steep and broad-based tariffs would drive up costs and erode purchasing power, according to Joanne Hsu, director of the University of Michigan’s Surveys of Consumers.
Households expect year-ahead inflation to rise to 4.3 percent, the highest since November 2023 and up from 3.3 percent last month, per the report. Five-year inflation expectations climbed to 3.5 percent, up from 3.2 percent in January and the highest reading since 1995.
Trump has acknowledged the recent uptick in inflation, which accelerated in January to a seven-month high of 3 percent, marking the fourth consecutive monthly increase. The president blames the previous administration, saying that inflation is a lingering effect of what he describes as reckless spending under President Joe Biden.
“Inflation is back,” Trump told Fox News during an interview alongside tech entrepreneur Elon Musk that aired on Feb. 18. “I’m only here for two and a half weeks, and they said, ‘Oh, Trump inflation’ and I had nothing to do with that.”
“They spent money like nobody has ever spent,” Trump continued. “They were given $9 trillion to throw out the window.”
In a separate Feb. 21 interview with Fox News, Trump was asked when Americans could expect his economic policies to take effect.
By Tom Ozimek
