One-year inflation expectations also cooled to the lowest level in more than a year.
American consumers grew more upbeat for the third consecutive month as inflation expectations continued to ease.
The preliminary February University of Michigan Consumer Sentiment Index rose by almost 2 percent to 57.3, from 56.4 in January—the highest level since August 2025.
The widely watched monthly survey came in firmly above market expectations of 55.
The index for current economic conditions surged more than 5 percent from the previous month, while consumer expectations dipped 0.7 percent.
All indexes were down about 11 percent from a year ago.
Modest improvements in current finances and durable‑goods buying conditions were offset by a slight deterioration in the long‑term business outlook.
Additionally, the survey’s findings further supported the two-speed economy narrative, according to Joanne Hsu, director of consumer surveys.
“Sentiment surged for consumers with the largest stock portfolios, while it stagnated and remained at dismal levels for consumers without stock holdings,” Hsu said in a statement.
Anxiety over the hit to personal finances from persistent price pressures and the increased risk of unemployment continues to be widespread, Hsu added.
The U.S. labor market remains a low-fire, low-hire environment, as businesses are reluctant to lay off staff and hesitant to expand headcount.
Some economic observers have questioned the veracity of the university’s data.
Last month, Morning Consult chief economist John Leer argued that it would be unwise to assume the consumer outlook has turned the corner.
“What we know from Morning Consult’s daily data is that consumers across the income spectrum are more vulnerable to pullbacks in labor demand,” Leer said.
“It would be wrong to conclude that the outlook for consumers has turned the corner and started to improve following the downshift in jobs growth in August and September 2025.”
Meanwhile, amid fears of elevated inflation, the outlook has improved for six straight months.
One-year inflation expectations fell to 3.5 percent, from 4 percent in January—the lowest since January 2025.
“This month’s reading still exceeds those seen in 2024 and remains well above the 2.3-3 percent range seen in the two years pre-pandemic,” Hsu said.
The five-year inflation forecast, however, ticked up to a three-month high of 3.4 percent, from 3.3 percent in the previous month.
By Andrew Moran
