The University of Michigan Survey of Consumers revealed a significant drop in consumer sentiment for March, recording a mid-month reading of 57.9. This figure represents a 10.5% decline from February and falls short of the Dow Jones consensus estimate of 63.2. The reading is also 27.1% lower than a year ago and marks the lowest level since November 2022, indicating rising concerns over inflation and a struggling stock market.
Joanna Hsu, the survey director, highlighted that overall sentiment has decreased by 22% since December. The one-year inflation outlook saw a notable increase to 4.9% in March, the highest reading since November 2022, having risen by 0.6 percentage points from February. The five-year inflation outlook also surged, reaching 3.9% in March, the highest since February 1993, with a 0.4 percentage point increase from the previous month.
Consumer sentiment has been affected by inflationary pressures and uncertainties surrounding economic policies. The current conditions index dropped by 3.3% on a monthly basis, reflecting immediate concerns among consumers. Meanwhile, the expectations measure for the future decreased by 15.3% month-over-month and was down 30% compared to the same period in 2024.
"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." – Joanna Hsu
These findings underscore the challenges consumers face amid fluctuating economic dynamics. The combination of inflationary pressures and policy uncertainties has contributed to diminished confidence levels.