U.S. consumer sentiment dropped more than expected in February to a 15-month low and inflation expectations rocketed as households worried that President Donald Trump’s plans for steep and broad-based tariffs would eat into their purchasing power.
The University of Michigan Surveys of Consumers on Friday said its Consumer Sentiment Index dropped to 64.7 from January’s revised final reading of 71.7. The reading, the lowest since November 2023, was lower than the preliminary reading of 67.8, which was also the consensus expectation among economists polled by Reuters.
Meanwhile households saw inflation over the next year surging to 4.3% – the highest since November 2023 – from 3.3% last month. That was unchanged from the preliminary reading two weeks ago.
Over the next five years households saw inflation running at 3.5% – the highest since 1995 – compared with 3.2% in January. That was up from the preliminary reading two weeks ago for 3.3%.
Trump has been fixated on tariffs for decades. I don’t expect him to pull back on them now that he has obtained the status of emperor. But he should.
Wait until we get the new unemployment numbers. They’ll say it’s all fake news. But no one but the hardest core MAGA cult will believe it.