Consumer sentiment slid nearly 10% from January and fell for the second straight month.

The decrease was unanimous across groups by age, income and wealth. All five components of the sentiment index deteriorated this month, led by a 19% plunge in buying conditions for durables, due in part to fears that tariff-induced price increases are imminent, said economist Joanne Hsu, director of the University of Michigan’s Surveys of Consumers.

Expectations for personal finances and the short-run economic outlook both declined almost 10% in February, while the long-run economic outlook fell back about 6% to its lowest reading since November 2023. Sentiment fell for Democrats and Independents, but was unchanged for Republicans, reflecting ongoing disagreements on the consequences of new economic policies.

“Consumers’ expectations for the path of inflation worsened considerably this month; they are clearly bracing for a resurgence in inflation,” Hsu said. “A spike in inflation expectations is not necessarily a cause for concern, but if these views persist, it could become problematic for policymakers. Consumers broadly anticipate that tariff hikes will lead to higher inflation, but policy uncertainty means that their views are subject to change.”

Tariff developments raise worries about inflation

News about tariffs—whether rhetoric about trade or concrete policy announcements from the White House—appear to be filtering down to consumers.

About 40% of consumers spontaneously mentioned tariffs, up from 27% last month and less than 2% prior to the election, Hsu said. More importantly, consumers appear to be folding economic policy developments into their expectations on the trajectory of the economy.

Following the January 31 announcement that tariffs on China, Canada and Mexico would be implemented, year-ahead inflation expectations immediately surged. Although the North American tariffs were suspended relatively quickly, additional tariffs were announced thereafter, and inflation expectations have remained elevated.

Outlook weakens for personal finances, macroeconomy

Consumers expressed unease about multiple economic factors for the year ahead, providing headwinds for consumer sentiment and spending. More than half of consumers expect unemployment to rise in the year ahead, the highest share since the pandemic recession.

Views of personal finances broadly deteriorated this month as well, with almost 40% of consumers blaming high prices for eroding their living standards. Although a majority of consumers expect their incomes to rise, only 16% expect their income gains to outpace inflation, yet another sign of their worries over the trajectory of prices.

Consumer Sentiment Index

The Consumer Sentiment Index fell to 64.7 in the February 2025 survey, down from 71.7 in January and below last February’s 76.9. The Current Index fell to 65.7, down from 75.1 in January and below last February’s 79.4. The Expectations Index fell to 64.0, down from 69.5 in January and below last February’s 75.2.

About the surveys

The Surveys of Consumers is a rotating panel survey at the University of Michigan Institute for Social Research. It is 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 web. The minimum monthly change required for significance at the 95% level in the Sentiment Index is 4.8 points; for the Current Index and Expectations Index, the minimum is 6 points.