Consumer sentiment in the United States has plummeted in March, reaching its lowest level since November 2022, according to the latest University of Michigan consumer sentiment survey. The index fell to 57.9, significantly below the 64.7 recorded last month and the 63 expected by economists. This decline is largely attributed to growing concerns over inflation and the uncertainty surrounding President Donald Trump’s tariff policies.
Inflation expectations have surged, with one-year inflation expectations jumping to 4.9% from 4.3% the previous month. This marks a sharp increase from the 3.3% expectation just two months ago. Long-term inflation expectations, tracking the next five to ten years, also rose to 3.9% in March, up from 3.4% in February. This is the highest level of long-term inflation expectations since 1991.
The survey also revealed that the expected change in unemployment has hit its lowest level since the Great Financial Crisis. Joanne Hsu, director of the University of Michigan Survey of Consumers, noted that while current economic conditions remained relatively stable, future expectations across various economic facets—including personal finances, labor markets, inflation, business conditions, and stock markets—have deteriorated. Hsu highlighted the high level of uncertainty around policy and other economic factors as a significant contributor to this decline in sentiment.
The recent tariff policies implemented by the Trump administration have added to the economic uncertainty. Frequent changes in tariff rates and implementation dates have made it difficult for consumers to plan for the future. The European Union and Canada have threatened retaliatory tariffs in response, further complicating the economic landscape.
Despite these concerns, recent data from the Bureau of Labor Statistics showed some positive signs. The “core” Producer Price Index (PPI), which excludes food and energy, rose 3.4% year-over-year in March, down from 3.6% in January. Similarly, the Consumer Price Index (CPI) showed core prices rose 3.1% in February, the lowest yearly increase since April 2021.
Harry Chambers, assistant economist at Capital Economics, attributed the increase in inflation expectations to consumers’ growing concerns about the impact of tariffs. The survey’s release coincided with the S&P 500 entering a correction, falling more than 10% from its February 19 all-time high. Wall Street strategists have pointed to the uncertainty around Trump’s policies as a key driver of the recent market sell-off.
Anne Walsh, CIO of Guggenheim Partners Investment Management, noted that the volatile narrative surrounding tariffs is contributing to market volatility. As long as this uncertainty persists, a clear path higher for stocks may remain elusive.
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