U.S. consumer sentiment improved to a 13-month high in February, but households expected higher inflation to persist over the next 12 months, a survey showed on Friday.
The University of Michigan’s preliminary February reading on the overall index of consumer sentiment came in at 66.4, the highest reading since January 2022, up from 64.9 in the prior month. Economists polled by Reuters had forecast a preliminary reading of 65.0.
The sentiment index has rebounded from a low of 50.0 in June last year. The survey’s measure of current economic conditions increased to a reading of 72.6 this month from 68.4 in January.
Its gauge of consumer expectations dipped to 62.3 from a reading of 62.7 last month, likely reflecting lingering recession fears.
The improvement in sentiment was probably driven by a rally on the stock market and persistent labor market strength.
It raised hope that the economy could avoid the much-feared recession and that any downturn would likely be short and mild, economists said.
Rising sentiment also suggested that the sharp declines in retail sales in November and December were a fluke.
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