Consumer sentiment fell sharply in early February to levels associated with previous recessions, dragged down by concerns a bleak economic outlook would raise the unemployment rate, a survey showed on Friday.

The Reuters/University of Michigan Surveys of Consumers index of consumer sentiment dropped to 69.6, the lowest reading since February 1992, and below analysts' median forecast for a preliminary reading of 76.3.

The index was at 78.4 at the end of January.

The sentiment index has only been this low during the recessions of the mid 1970s, the early 1980s and the early 1990s, survey director Richard Curtin said in a statement.

The report pushed the dollar lower versus the euro, while short-term interest rate futures raced to fresh session highs as the market priced in a half-percentage-point Federal Reserve interest rate cut in March.

Pessimism was widespread among households of all incomes and age groups, with half the consumers surveyed expecting declines in real incomes and higher unemployment in the year ahead.

In addition, 86 percent of consumers believed the economy was in decline, the highest number since 1982. The current economic conditions index fell to 85.4 in early February, the lowest level since October 1992, and below a reading of 94.4 at the end of January.

The expectations index, a component of the index of leading economic indicators dived to 59.4, a 16-year low. The index was at 68.1 at the end of January.

Year-ahead prospects for the national economy were just as bleak as 72 percent expected bad times, a level comparable to the worst level in the recessions of the early 1990's and 1980's, said Curtin.

Long-term inflation expectations were unchanged at 3.0 percent, but consumers believe price pressures will rise in the year ahead.

(Reporting by Lucia Mutikani; Editing by James Dalgleish)

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