(RTTNews) - Consumer sentiment in the month of February has deteriorated by even more than economists had been anticipating, according to a preliminary report released by Reuters and the University of Michigan on Friday.

The report showed that the consumer sentiment index fell to a reading of 56.2 in February from a reading of 61.2 in January. Economists had been expecting a more modest decrease by the index to a reading of about 60.2.

With the bigger than expected decrease, the consumer sentiment pulled back near the twenty-eight year low of 55.3 reached in November.

Brian Bethune, Chief U.S. Financial Economist at IHS Global Insight, said, “These record low readings for consumer sentiment suggest that American households are likely to remain hunkered down in the face of intensifying recessionary forces.”

“While January’s retail sales report indicates that consumers can be re-engaged to spend, this will require major incentives in the form of special financing options or other deep discounts,” Bethune added.

The steep drop in consumer sentiment reflected a notable deterioration in confidence about the outlook for the economy, with the expectations index falling to 49.1 in February from 57.8 in the previous month. With the decrease, the index fell to its lowest level since 1980.

At the same time, the report showed that the current conditions index edged up to 67.1 in February from 66.5 in January.

Reuters and the University of Michigan added that one-year inflation expectations fell to 1.6 percent in February from 2.2 percent in January, while five-year inflation expectations edged up to 3.0 percent from 2.9 percent.

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Posted in Categories: Economy, Forex, Releases, USA.

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