Inflation Expectations Hit 50 Year Lows in the US

Inflation Expectations Hit 50 Year Lows in the US

FLASH: Inflation expectations fell to a 50 year lows in February, according to the University of Michigan’s Survey of Consumers (MSI).

Overall consumer sentiment bounced back in February following the end of the Federal government shutdown, although the rebound was smaller than economists anticipated. 

The survey produced a reading of 93.8 for final February, up 2.6 points from January. The survey’s mid-month look had the index up even further, to 95.5.

Economists had forecast even further improvement, to 95.7.

“The most important finding from the February survey was the decline in long-term inflation expectations to a 50-year low,” said the director of the survey.

Inflation fell short of the Fed’s 2 % target in Y 2018 for a 7th year running. The Fed has acknowledged that it likely needs to do more to restore the credibility of its target, including allowing inflation to run above the target for some time.

Despite the lower than expected sentiment reading, the index is still quite high by historical measures. And the data indicate that personal consumption expenditures will grow by 2.6% in Y 2019, unchanged from the level recorded in Y 2018.

The Trump Administration’s policies are working for the benefit of all Americans.

Have a terrific weekend.

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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