Consumers More Optimistic About the Present, But See Inflation Higher in the Near Term – By Tim Smart (US News) / Feb 24, 2023
The latest survey will add to concern the Federal Reserve needs to keep interest rates higher for longer.
Consumer sentiment perked up in February, but so did inflation expectations, complicating the Federal Reserve’s campaign to reverse the trend of higher prices, a key report from the University of Michigan said on Friday.
The overall preliminary index for February rose 1.5 points to 66.4 but the measure of current economic conditions rose 4.2 points to 72.6, while the gauge of future expectations dipped slightly to 62.3 from 62.7.
“After three consecutive months of increases, sentiment is now 6% above a year ago but still 14% below two years ago, prior to the current inflationary episode,” said Joanne Hsu, survey director. “Overall, high prices continue to weigh on consumers despite the recent moderation in inflation, and sentiment remains more than 22% below its historical average since 1978. Combined with concerns over rising unemployment on the horizon, consumers are poised to exercise greater caution with their spending in the months ahead.”
