Consumer sentiment falls to 70.8 in February, according to U. Michigan survey

The Reuters/University of Michigan Survey of Consumers final February 2008 consumer sentiment index fell to 70.8 from the January 2008 final reading of 78.4, Reuters reported Friday.

Analysts surveyed by Reuters had expected the index to decline to 70.0.

The consumer sentiment index has dropped about 10 points since its 80.9 level in October 2007.

The current conditions index fell to 83.8 in February 2008 from 94.4 in January 2008, while the expectations index fell to 62.4 from 68.1.

Meanwhile, 1-year inflation expectation increased to 3.6% in February 2008 from 3.4%, while the 5-year inflation expectation remained unchanged at 3.0%.

Economic Analysis: The February 2008 statistic -- the sentiment index's third decline in the past four months -- indicates U.S. consumers continue to be concerned about the U.S. economy. Almost as important as real income gains and wealth gains, consumer sentiment is a telling statistic because sentiment, or consumer bullishness/bearishness, frequently precedes an increase/decrease in spending. Further, while the relationship between confidence and spending is not perfect, continued declines/increases in consumer sentiment over several months is viewed as an accurate gauge concerning whether they believe economic conditions are improving or deteriorating.