UMich Inflation Expectations Explode To 30 Year High

After exploding higher (to 4.3%) in the preliminary February data, UMich’s final print for inflation expectations (1Y) was the same but the medium-term (5-10Y) expectation shot up to 3.5% – its highest since April 1995

Source: Bloomberg

In the flash data, UMich noted that the partisan divide over inflation expectations (1Y) was an extreme record (Democrats +5.1%, but Republicans 0.0%) and the final data confirmed that…

Source: Bloomberg

But for the 5-10Y inflation expectation, the partisan divide grew even more with Democrats convinced long-term inflation will be at 4.2% while Republicans see it closer to 1.5%…

Source: Bloomberg

UMich’ Director Joanne Hsu notes that Consumer sentiment extended its early month decline, sliding nearly 10% from January. 

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The decrease was unanimous across groups by age, income, and wealth. All five index components deteriorated this month, led by a 19% plunge in buying conditions for durables, in large part due to fears that tariff-induced price increases are imminent. Expectations for personal finances and the short-run economic outlook both declined almost 10% in February, while the long-run economic outlook fell back about 6% to its lowest reading since November 2023.

We remain unclear just how UMich is weighting their survey (or who they are asking) because their results are a considerable outlier…

spot the odd inflation expectation out: is UMich has become the center of the new anti-Trump “inflationary resistance” pic.twitter.com/Gke4X6Pfni

— zerohedge (@zerohedge) February 21, 2025

While sentiment fell for both Democrats and Independents, it was unchanged for Republicans, reflecting continued disagreements on the consequences of new economic policies. Confidence for Democrats is at its lowest since June 2008…

From what we can tell, all this data shows is that leftists media fearmongering propaganda works… on Democrats.