US consumer confidence fell in February to its lowest level for seven months as inflation fears and tariffs increased.
Bloomberg’s survey of economists revealed that the University of Michigan preliminary sentiment index dropped to 67.2, down 3.3 from previous months. This was below all forecasts.
Consumers are feeling the impact of rising inflation expectations
Consumers now expect prices to increase by 4.3% in the coming year. This is a whole percentage point more than they did back in January.
The Americans’ expectations for the longer term also increased, as they predicted a 3.3% increase per year over the next 5 to 10 years.
Tariff policies by President Donald Trump could increase prices and reduce consumer spending.
As price worries increase, the survey showed that buying habits for costly items such as vehicles and appliances had declined by 12 points.
All political parties have seen a decline in consumer sentiment.
Republican optimism dropped to the lowest level seen since October, and Democratic confidence fell to its lowest since 2020.
The Independents have also expressed a declining level of optimism.
Joanne Hsu is the director of this survey. She said that Republicans appear to have moderated their confidence after Trump’s election, while Democrats are still concerned about Trump’s economic policies.
The job market is showing signs of a slowdown
Separate data published on Friday showed that the hiring rate slowed down in January. Government revisions revealed that the job market last year wasn’t quite as robust as originally reported.
The unemployment rate is also higher, and it takes longer for Americans to get a job.
The expectations index fell to 67.3 in November 2023, the lowest level it has been since November.
The economic uncertainty is also reflected in the fact that expectations about personal finances have fallen to their lowest level since October 2023.
As new information becomes available, this post US consumer confidence drops to 7-months low amid inflation fears may be updated.
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