US Consumer Inflation Expectations Surge Amid Confidence Decline

In February, U.S. consumer confidence dropped to a 15-month low, primarily due to rising inflation fears and deteriorating economic expectations. The University of Michigan's Consumer Sentiment Index fell from 71.7 to 64.7, with significant declines across all components, including a 19% plunge in buying conditions for durable goods. Consumers now expect inflation to rise to 4.3% over the next year and 3.5% over the next five years, marking the highest long-term inflation expectation since 1995. This decline in sentiment is largely attributed to concerns over President Trump's proposed tariffs, which many fear will lead to increased consumer prices. With more than half of respondents anticipating a rise in unemployment, economic uncertainty is growing, prompting caution in consumer spending. Additionally, the Federal Reserve is likely to remain cautious about interest rate cuts amidst these inflationary pressures.