The University of Michigan’s measure of consumer sentiment fell to a three-year low in March, with the index slipping to 53.3, down from 56.6 in February.
Joanne Hsu, director of the survey, said that consumers are worried they will be paying more for goods, including gasoline. Short-term inflation expectations rose four-tenths of a percentage point to 3.8%. “The persistence of high prices continues to be the dominant factor for consumer views of the economy, with 47% of consumers spontaneously noting that prices are currently eroding their personal finances,” she said in a statement.
The drop in sentiment was particularly noticeable among higher-income households. “Consumers with middle and higher incomes and stock wealth, buffeted both by escalating gas prices and volatile financial markets in the wake of the Iran conflict, exhibited particularly large drops in sentiment,” Hsu said.
Heather Long, chief economist at Navy Federal Credit Union, noted that there have been only three lower readings on the sentiment index: during the longest government shutdown in history last fall, following President Trump’s announcement of his “liberation day” tariffs last spring, and during the Covid-era surge in inflation in 2022.
“Americans are struggling to navigate all this uncertainty, along with price hikes and a frozen job market,” Long said. “Even wealthier consumers are turning gloomier this time.
