Consumer Sentiment Rises, but Only for Stock-Heavy Households — Evening Brief – 02.06.26
U.S. consumer confidence showed tentative signs of stabilization in February, supported by easing near-term inflation expectations and a modest improvement in views of current economic conditions. Still, sentiment remains historically depressed, and gains are being driven disproportionately by higher-wealth households.
The University of Michigan Consumer Sentiment Index rose to 57.3 in February, beating expectations for 55.0 and up from 56.4 in January. While the reading marks the highest level since August 2025, it remains roughly 20% below where sentiment stood in January 2025, underscoring how fragile consumer confidence remains.
The improvement was driven primarily by better assessments of current conditions and a moderation in short-term inflation expectations. One-year inflation expectations fell to 3.5%, the lowest reading since January 2025, down from 4.0% previously. Longer-term inflation expectations, however, edged slightly higher, with five-year implied inflation rising to 3.4% from 3.3%.
Beneath the headline figures, the data highlighted a widening divergence across households. “Sentiment surged for consumers with the largest stock portfolios, while it stagnated and remained at dismal levels for consumers without stock holdings,” said Joanne Hsu, director of the Surveys of Consumers.
The index of current economic conditions climbed to 58.3, well above the prior reading of 55.4 and stronger than consensus expectations. By contrast, the expectations index was little changed at 56.6, reflecting lingering uncertainty about the economic outlook despite easing inflation pressures.
“While sentiment is currently the highest since August 2025, recent monthly increases have been small—well under the margin of error—and the overall level of sentiment remains very low from a historical perspective,” Hsu added.
The February data suggest that while inflation relief and asset-market gains are helping stabilize confidence at the margins, broad-based optimism remains elusive, particularly for households without exposure to rising financial markets.