Long-term UMich Inflation Expectations Remain Sticky At 2.9%

U.Mich prelim 1-year inflation expectations printed a touch higher than consensus at 3.0% (vs 2.9% prior and cons). Longer term 5-10-year expectations were steady at 2.9% Y/Y, 0.1pp above the 2.8% consensus.

• It means that longer-term expectations have remained steady for three consecutive months, with 1-year ahead expectations oscillating between 2.9-3.1% in that time.
• Longer-term expectations have failed to see a similar moderation to the NY Fed's 3Y and 5Y measures, which were 2.35% and 2.50% respectively in January.
• Consumer sentiment and current conditions indices both fell short of consensus (sentiment 79.6 vs 80.0 cons, 79.0 prior; conditions 81.5 vs 82.5 cons, 81.9 prior), while the expectations component overshot at 78.4 (vs 77.0 cons, 77.1 prior).

Some key notes from the report:

• Sentiment improved for a third month as Americans grew more optimistic about the outlook for the economy and inflation.
• While prices remain high, Americans are taking solace in the fact that inflation has largely been cooling. That, combined with a labor market that continues to support resilient consumer spending, is contributing to the recent improvement in sentiment.
• Five-year business expectations at their highest in more than three years.
• While consumers’ perception of their current financial situation improved slightly, their expectations eased.