The latest data released on Friday, February 12, the University of Michigan consumer confidence index fell unexpectedly to 76.2 in February, a six-month low, the market was expected to increase slightly from the previous value of 79 in January to 80.9. analysis said that this data is even worse than the most pessimistic expectations of economists.
Among them, in the survey conducted from January 27 to February 10, the consumer current situation index fell from the previous value of 86.7 in January to 86.2 in early February, weaker than the expected 89; consumer expectations index fell from the previous value of 74 to 69.8, weaker than the expected 76, also hit a six-month low. Bloomberg also said that the consumer outlook indicator for financial conditions fell to 116, a six-year low since November 2014.
All of the above data marked an unexpected retreat in both U.S. consumer confidence and the sub-indices, despite rising hopes that the Biden administration will pass a new round of massive fiscal stimulus of $1.9 trillion, and the market had expected an improvement in early February, reversing the trend of a collective year-over-year decline in these indicators in January.
In addition to the deteriorating outlook for personal income, consumer sentiment has fallen back, and more Americans expect Inflation to rise rapidly in the coming year.
Among them, inflation expectations for the year ahead were at an early February reading of 3.3%, a six-and-a-half-year high since July 2014, breaking the previous January reading of 3%, the highest since August 2020. Inflation expectations for the next five years were unchanged at 2.7% in the preliminary February reading, but still well above the 2.3% in February 2020 (a year ago).
Zerohedge, a financial blog known for its venom, commented that the Michigan Consumer Confidence Index is hinting at stagflation in the U.S. as indicators of business conditions plummet and inflation expectations soar over the next year.
The decline in the index in early February was concentrated in the expectations sub-index and among households earning less than $75,000 a year. The report noted that the lowest third of households with incomes have suffered a major setback in their current financial situation, with only 23 percent reporting financial improvement, the lowest level since 2014, while 54 percent of households in the highest third of incomes said their financial situation had improved.
Richard Curtin, director of the survey, noted that a new round of massive fiscal stimulus to send $1,400 checks to each eligible American would reduce the aforementioned financial difficulties. In addition, Americans’ purchasing power conditions for homes and vehicles fell consecutively in January and early February. Analysis says that despite the impending fiscal stimulus, U.S. consumers are not as optimistic about the economic outlook as they were in January.
However, rising unemployment, limited social activities due to the Epidemic, and slow vaccination rates also depressed confidence. Confidence may stabilize as U.S. states ease restrictions on business and more people are expected to be vaccinated in the coming months.
Following the data release, the three major U.S. stock indices diverged, with the S&P 500 and Nasdaq turning higher and the Dow holding lower.
Within 2 hours of the U.S. stock market opening, spot Gold pulled up more than $10 in the short term and turned up 0.2% overall during the day to a new daily high of $1,829.46/oz. Spot silver also briefly pulled up more than $0.30, the overall intraday gain expanded to more than 1.4%, refreshing the daily high to $27.40/oz. The ICE dollar index almost completely retraced earlier gains in the day, hitting a short term low of 90.46, off the daily high of 90.74 recorded before the U.S. stock market.
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