University of Michigan's Index of Consumer Sentiment posts preliminary February level of 61.7, down from January's 67.2, below February 2020's 76.8; decline reflects weakening personal financial prospects, less confidence in government economic policies

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February 11, 2022 (press release) –

Preliminary Results for February 2022
                                                        Feb      Jan     Feb        M-M           Y-Y
                                                       2022    2022    2021    Change    Change
Index of Consumer Sentiment        61.7     67.2     76.8     -8.2%       -19.7%
Current Economic Conditions         68.5     72.0     86.2     -4.9%       -20.5%
Index of Consumer Expectations    57.4     64.1     70.7     -10.5%     -18.8%

Next data release: Friday, February 25, 2022 for Final February data at 10am ET

Read our January 12th report: The Partisan Economy

Read Dr. Curtin's latest paper, Nonconscious cognitive reasoning: A neglected ability shaping economic behavior.
Surveys of Consumers chief economist, Richard Curtin

Sentiment continued its downward descent, reaching its worst level in a decade, falling a stunning 8.2% from last month and 19.7% from last February. The recent declines have been driven by weakening personal financial prospects, largely due to rising inflation, less confidence in the government's economic policies, and the least favorable long term economic outlook in a decade. Importantly, the entire February decline was among households with incomes of $100,000 or more; their Sentiment Index fell by 16.1% from last month, and 27.5% from last year. The impact of higher inflation on personal finances was spontaneously cited by one-third of all consumers, with nearly half of all consumers expecting declines in their inflation adjusted incomes during the year ahead. In addition, fewer households cited rising net household wealth since the pandemic low in May 2020, largely due to the falling likelihood of stock price increases in 2022.

The recent declines have meant that the Sentiment Index now signals the onset of a sustained downturn in consumer spending (see the chart). The depth of the slump, however, is subject to several caveats that have not been present in prior downturns: the impact of unspent stimulus funds, the partisan distortion of expectations, and the pandemic's disruption of spending and work patterns. Households have amassed substantial savings and reserve funds from the stimmies as well as due to more limited consumption choices, especially services. There may be a lessened need for additional precautionary savings and a greater desire to engage in discretionary spending.

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