Consumer attitudes about the state of the economy unexpectedly dropped to a six-month low despite good news about vaccinations and more stimulus funds on the way, according to the Consumer Sentiment Index (CSI) report released on Friday (Feb. 12) by the University of Michigan.
The preliminary CSI of 76.2 came in at the lowest level since August, dropping from a more hopeful 79.0 last month. Economists had forecast that the index would hit 80.8 this month.
Last year at this time, the index was 101.0, just weeks before the country was crippled by the COVID-19 pandemic that had already started spreading throughout much of the world. The average for the second half of 2020 was 97.6.
Consumers polled for the university’s monthly report were divided along income lines when asked to assess their current financial situation. Just 23 percent of respondents in the bottom third income level said their finances improved, the lowest percentage since 2014. A little more than half of the respondents in the top third income level reported that their finances had improved. Just 17 percent of people in the bottom third reported income gains, while 44 percent in the top third said they experienced a boost in their finances.
Richard Curtin, the survey’s chief economist, said the drop in sentiment was concentrated in the measure of future expectations, among 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 any time since 2014,” Curtin noted in the report.
PYMNTS data released on Jan. 11 showed that people are still quite concerned about the pandemic, and anticipate that everyone will still be dealing with it in some capacity until next year.
This week’s unemployment report edged downward for the fourth consecutive week, as new coronavirus cases also dropped and vaccine distribution increased. And the Consumer Price Index report released on Wednesday (Feb. 10) increased again, continuing an upward trend. A January Federal Reserve report indicated that people anticipate they will spend more money in 2021 than they have in many years.