Americans keep feeling worse about this high-inflation economy

An early look at consumer sentiment in February shows just that. Sentiment dropped more than economists expected between the first two months of the year, reaching the worst level in a decade at 61.7 points, the University of Michigan reported Friday. That’s more than an 8% drop from the January level.

Americans are concerned about their household finances in the light of rampant pandemic-era inflation.

Respondents to the consumer survey also displayed the least favorable long-term outlook on the US economy in a decade.

Will consumers stop spending?

America’s economy runs on consumer spending. That’s why data such as the sentiment index is so important in forecasting how the recovery might fare in coming months.

“The recent declines have meant that the sentiment index now signals the onset of a sustained downturn in consumer spending,” said Richard Curtin, chief economists of the Surveys of Consumers.

That could be bad news for the recovery. At the same time, household savings are still bolstered because many people changed their spending habits during the pandemic, which could help support spending going forward.

Inflation is widely expected to fall this year as some of the pandemic pressures, including supply chain challenges, ease. But whether the near 40-year high from January was the peak remains to be seen.

–CNN’s Jennifer Agiesta and Ariel Edwards-Levy contributed to this report.