UMich Sentiment Rebounds In Feb But Inflation Forecast Hits Record Low

After plunging in January, UMich Sentiment was expected to rebound modestly in February (helped by the biggest rebound in stocks in a decade) but it dramatically beat expectations, jumping from 91.2 to 95.5 (93.7 exp).

Current Conditions and Expectations rebounded (the latter notably more than the former) but none of the indices managed to regain the December levels…

Despite a rebound in hope, inflation expectations (both short- and long-term) tumbled in Feb (the latter to a record low)…

The data suggest that the Fed will find it even harder to justify another rate hike given the record low inflation expectations; the data will also add to the debate about the evolving relationship between unemployment and inflation as consumers now anticipate lower inflation and higher unemployment.

And at the same as inflation expectations hit a record low, household income growth expectations soared…

The end of the shutdown meant that consumers held a more favorable outlook for the national economy, but those prospects were still less favorable than a year ago. Favorable conditions in the economy were anticipated by 48% in February, up from last month’s 40%, but still well below last year’s 57%; long term prospects were judged as equally likely to include or exclude an economic downturn. These diminished prospects meant that the national unemployment rate was expected to increase rather than decline any further in each of the past three months, although nearly half expected no change from its current low


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