US Consumer Sentiment Wanes

Date: February 16, 2016

Michigan Index Shows February Sentiment at Lowest Level In Four Months

The latest University of Michigan data on US Consumer Sentiment indicates continued wariness among Americans when it comes to overall economic conditions. Sentiment fell to its lowest level in fourth months, the data show, falling to 90.7 points from January’s 92 points. For the year, the US Consumer Sentiment index is down 4.9 percent. The current economic conditions component of the index fell in February to 105.8 from January’s 106.4. The index of consumer expectations also saw a decline, falling to 81.0 in February from January’s reading of 82.7. Surveys of Consumers Chief Economist Richard Curtin pointed out that the latest data show a relatively mixed portrait of the US economy for the months ahead. He explained that although the February declines were the result of “a less favorable outlook for the economy during the year ahead,” projections among consumers for the US economy after 2016 “remained unchanged at favorable levels.” Additionally, consumers seem to be seeing a “somewhat more” favorable outlook for “their personal financial situations,” Curtin said “due to the expectation that the inflation rate would remain low for a considerable period of time.” Bloomberg News reported similar analysis from Jefferies LLC money-market economist Thomas Simons, who said, “Consumers tend to feel much better about not only their ability to consume in the near-term when they have a little bit more cash in their pocket. But they also feel better about their longer-term inflation prospects too, being somewhat lower.” Thus, sentiment may regain ground following a calming of “the recent turmoil in equity markets.”

What This Means For Small Businesses

The latest data indicate that while some areas of the US economy are showing improvements, consumers remain wary about the overall state of the economy in the first quarter of 2016. This general economic unease is being reflected in the small business community as well, as the latest Small Business Economic Trends report suggested. NFIB Chief Economist William Dunkelberg explained, “The decline in optimism was accounted for by two important Index components, expected business conditions in six months and expected real sales.” He cautioned that “overall, it is unlikely that anything will occur that will raise the spirits of small business owners.”

Additional Reading

Dow Jones Newswires also reported on falling consumer sentiment.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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