The U.S. consumer took a hit in early February, with the University of Michigan’s sentiment index dropping from 67.8 from 71.1, a seven-month low.
And inflation concerns are mounting. Short-term inflation expectations jumped to 4.3%, up a full percentage point from the previous month, as worries about tariffs grow. President Donald Trump’s tariff push is adding to inflation uncertainty, potentially weighing on consumer spending. Buying conditions for big-ticket items took a hit, with a 12 percentage point drop from January.
Coupled with cooling employment growth, consumers’ financial outlook is worsening. Expectations for personal finances in February dropped to their lowest point since October 2023, and confidence in the economy’s trajectory also fell.
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