Confidence among consumers ticked higher this month, marking its third consecutive monthly increase and reaching its highest level since July 2021.
The University of Michigan's Consumer Sentiment Index rose slightly to 79.6 in February 2024, up from 79 points in January, indicating healthy conditions and resilience among consumers despite interest rates being at their highest in over two decades.
However, there are some concerns regarding consumer inflation expectations. Despite remaining broadly unchanged for the long term, there has been a slight increase in expectations for the year ahead, with both estimates exceeding the Federal Reserve's 2% target.
"The fact that sentiment lost no ground this month suggests that consumers continue to feel more assured about the economy, confirming the considerable improvements in December and January across various aspects of the economy," University of Michigan's Surveys of Consumers director Joanne Hsu said Friday.
Michigan Consumer Sentiment: Key Highlights
- The overall consumer sentiment index rose from 79 to 79.6 in February, slightly below the expected 80, according to preliminary data revealed Friday by the University of Michigan.
- The subindex for consumer expectations rose from 77.1 to 78.4, surpassing the expected 76.5.
- The subindex for current conditions eased from 81.9 to 81.5, missing the predicted 82.
- The 5-year ahead inflation expectations held steady at 2.9%
- The year ahead inflation expectations edged up from 2.9% to 3%.
U.S. stocks declined on Friday after a higher-than-expected Producer Price Index (PPI) report reignited fears that the Federal Reserve might delay interest rate cuts for an extended period.
The SPDR S&P 500 ETF Trust (NYSE: SPY) fell 0.3% at 10:15 a.m. in New York, while the tech-heavy Invesco QQQ Trust (NASDAQ: QQQ) underperformed, down 0.8%.