Consumer confidence retreated in February from a 13-year high, as Americans tempered expectations of their finances and the economy.
The University of Michigan said Feb. 10 that its preliminary index of sentiment cooled to a three-month low of 95.7 from 98.5 in January. The median projection in a Bloomberg News survey called for 98.
Expectations for wage gains in the coming year deteriorated even as more respondents said this month that they were better off financially than at any other time in the past 12 years. More than half of those surveyed expect better economic conditions in the future, though the results reflected stark differences between Republicans and Democrats.
“Confidence remains quite favorable,” Richard Curtin, director of the University of Michigan consumer survey, said in a statement. Still, “the data do not reflect any closing of the partisan divide.”
The sentiment report’s current conditions index, which takes stock of Americans’ view of their personal finances, was little changed at 111.2 from a reading of 111.3 in the prior month.
The measure of expectations six months from now decreased to a three-month low of 85.7 from 90.3.
While a measure of consumers’ views of the current financial situation climbed to 129, the highest since November 2000, respondents’ expectations of finances fell to a six-month low.
Interest rates were expected to increase by three out of four consumers, the highest share in a decade. At the same time, 33% of all households, the most since March 1984, said in January and early February that they expected the jobless rate to fall in the coming year.
Consumers projected the inflation rate in the next year will be 2.8%, up from 2.6% in the prior month’s survey. Over the next five to 10 years, they expect a 2.5% rate of inflation, compared with 2.6% in the previous month.