CHICAGO, Feb. 25 (Xinhua) -- The Consumer Sentiment Index released Friday by the University of Michigan (UM) Surveys of Consumers fell to 62.8 in the February 2022 survey, down from 67.2 in January and well below last February's 76.8.
This is the lowest level in the past decade.
Meanwhile, the Expectations Index fell to 59.4 in February, down from January's 72.0 and 16 percent below last year's 70.7; the Current Conditions Index fell to 68.2, down from January's 72.0, and significantly below last year's 86.2.
Importantly, the loss was still entirely due to a 12.9 percent decline among households with incomes of 100,000 dollars or more, a group that has a significant impact on consumer spending, said UM economist Richard Curtin, director of the surveys.
The financial harm and growing angst among consumers about rising inflation have pushed nearly 9-in-10 consumers to anticipate interest rate hikes. However, the Federal Reserve's clinging to the transient hypothesis meant missed opportunities to nip inflation at its earliest stages, Curtin said.
Consumers evaluated their current financial situation as the worst in nine years, and when asked about their future financial prospects, more households expected worsening finances than any other time since May 1980. Consumers focused on inflation-adjusted incomes, which have turned quite negative. A median expected gain in nominal incomes was 1.9 percent in February, far lower than the anticipated year-ahead median inflation rate of 4.9 percent.
Virtually all interviews were conducted prior to the Russian military operation in Ukraine so its impact is yet to be felt by consumers. The most likely linkage to the domestic economy is through rising energy prices and the potential for retaliatory cyber disruptions of the economy, Curtin said.
The Surveys of Consumers is a rotating panel survey based on a nationally representative sample that gives each household in the coterminous U.S. an equal probability of being selected. Interviews are conducted throughout the month by telephone. ■
