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U.S. Consumer Sentiment Rebounds More Than Expected In February

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After reporting a notable deterioration in U.S. consumer sentiment in the previous month, the University of Michigan released preliminary data on Friday showing a bigger than expected rebound in sentiment in the month of February.

The report said the consumer sentiment index climbed to 95.5 in February after tumbling to 91.2 in January. Economists had expected the index to rise to 93.0.

Surveys of Consumers chief economist Richard Curtin said the rebound in consumer sentiment reflected the end of the partial government shutdown as well as a more fundamental shift in consumer expectations due to the Federal Reserve's pause in raising interest rates.

Consumers expressed significantly more optimism about the economic outlook, with the index of consumer expectations jumping to 86.2 in February after plunging to 79.9 in January.

The current economic conditions index showed a more modest increase, inching up to 110.0 in February after slumping to 108.8 in January.

On the inflation front, one-year inflation expectations dropped to 2.5 percent in February from 2.7 percent in January and five-year inflation expectations slid to 2.3 percent from 2.6 percent.

"The data suggest that the Fed will find it even harder to justify another rate hike given the record low inflation expectations," Curtin said.

He added, "The data will also add to the debate about the evolving relationship between unemployment and inflation as consumers now anticipate lower inflation and higher unemployment."

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