Consumer sentiment plunges to 29-month low
U.S. consumer sentiment took a big dive in March amid mounting concerns about rising inflation due to tariffs.
The University of Michigan’s Index of Consumer sentiment fell 11% in March to a reading of 57.9, hitting its lowest level since November 2022. Sentiment has now fallen for three consecutive months and is currently down 22% from December 2024.
Declines in March were seen consistently across all groups by age, education, income, wealth, political affiliations and geographic regions, according to said Joanne Hsu, director, surveys of consumers.
While consumer sentiment about current economic remained little changed from February, the index of consumer expectations (expectations for the next six months) slid 15.3% to 54.2 in March from 64.0 in February.
“Expectations for the future deteriorated across multiple facets of the economy, including personal finances, labor markets, inflation, business conditions and stock markets,” said Hsu. “Many consumers cited the high level of uncertainty around policy and other economic factors. Frequent gyrations in economic policies make it very difficult for consumers to plan for the future, regardless of one’s policy preferences.”
Hsu noted that consumers from all three political affiliations are in agreement that the outlook has weakened since February.
“Despite their greater confidence following the election, Republicans posted a sizable 10% decline in their expectations index in March. For Independents and Democrats, the expectations index declined an even steeper 12 and 24%, respectively,” she said.
Inflation
Year-ahead inflation expectations jumped up from 4.3% last month to 4.9% this month, the highest reading since November 2022 and marking three consecutive months of unusually large increases of 0.5 percentage points or more. The March rise was seen across all political affiliations.
Long-run inflation expectations surged from 3.5% in February to 3.9% in March.
“This is the largest month-over-month increase seen since 1993, stemming from a sizable rise among Independents, and followed an already-large increase in February,” Hsu said.
