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U.S. consumers' mood falls sharply in Feb - survey

Published 02/13/2009, 09:55 AM
Updated 02/13/2009, 09:56 AM

NEW YORK, Feb 13 (Reuters) - U.S. consumers' confidence fell to its lowest in three months in February as sentiment grew increasingly gloomy over an economic downturn that most expected to last five more years, a survey showed on Friday.

The Reuters/University of Michigan Surveys of Consumers said its index reading of confidence for February tumbled to 56.2 from 61.2 in January.

That was the lowest since November, when U.S. stocks hit 11-year lows during one of the worst periods of the current financial crisis. A separate reading in the report showed consumer expectations fell to their lowest since May 1980.

"Confidence fell in early February as consumers came to the consensus that the economy would remain in recession throughout 2009," the report said.

"Moreover, nearly two-thirds anticipated that the downturn would last five more years."

The index's headline number was well below economists' median expectation for a reading of 61.0 culled from 60 forecasts in a Reuters poll that ranged from 56.5 to 64.0.

The University of Michigan confidence index dates back to 1952. Its record low of 51.7 was hit in May 1980.

The February report showed mixed views on inflation.

One-year inflation expectations plummeted to 1.6 percent from January's 2.2 percent for the lowest since November 2001, highlighting worries that the United States might be headed for a deflationary period of falling prices, wages and economic activity.

However, five-year inflation expectations edged up to 3.0 percent from January's 2.9 percent.

That was the highest since September 2008 and is consistent with concerns of some in the financial markets that massive spending and borrowing by the government to bail out the economy might prove inflationary. (Reporting by Burton Frierson; Editing by James Dalgleish)

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