WASHINGTON (Reuters) – U.S. consumer sentiment unexpectedly fell in early February amid growing pessimism about the economy among households with annual incomes below $75,000, even as the government is poised to deliver another round of COVID-19 relief money.
The University of Michigan said on Friday its consumer sentiment index slipped to 76.2 in the first half of this month from a final reading of 79 in January. Economists polled by Reuters had forecast the index little changed at 80.8.
“More surprising was the finding that consumers, despite the expected passage of a massive stimulus bill, viewed prospects for the national economy less favorably in early February than last month,” the University of Michigan said in a statement.
President Joe Biden has proposed a $1.9 trillion recovery package, which is under consideration in the U.S. Congress. The government provided nearly $900 billion in additional pandemic relief in late December.
U.S. financial markets were little moved by the data.
The survey’s measure of current economic conditions dipped to a reading of 86.2 this month from 86.7 in January. Its gauge of consumer expectations dropped to 69.8 from 74.0 in January, attributed entirely to households with incomes below $75,000.
“Households with incomes in the bottom third reported significant setbacks in their current finances, with fewer of these households mentioning recent income gains than anytime since 2014,” the University of Michigan said.
“Among those with incomes in the bottom third, just 23% reported improved finances, the lowest since 2014. In contrast, among those with incomes in the top third, 54% reported their finances had improved.”
Consumers also appeared to anticipate higher inflation in the near-term. The survey’s one-year inflation expectations rose to 3.3% from 3.0%. But its five-year inflation outlook was unchanged at 2.7%.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)
