The latest University of Michigan survey, unveiled on Friday, revealed a more significant decline in consumer sentiment for March than analysts had anticipated, largely driven by escalating concerns over inflation.
The final results of the university’s reputable Survey of Consumers indicated a reading of 57.0 for March, marking an 11.9% decrease from February and a staggering 28.2% decline from the same month last year. Economists polled by Dow Jones had projected a slightly higher figure of 57.9, which was the mid-month estimate.
This marks the third consecutive month of falling consumer sentiment that affects various demographic segments, as noted by survey director Joanne Hsu.
“Consumers are increasingly apprehensive about the ongoing economic policies and the potential ramifications,” Hsu stated.
In particular, the index measuring consumer expectations saw a sharp drop to 52.6, reflecting a 17.8% decline from February and a considerable 32% year-on-year fall.
Much of this downturn is attributed to inflationary fears, with respondents anticipating a 5% inflation rate a year from now—a slight increase of 0.1 percentage points from mid-month estimations, and 0.7 points higher than the previous month. For the five-year outlook, expectations have risen to 4.1%, the first time this marker has exceeded 4% since February 1993.
Concerns are mounting regarding President Donald Trump’s tariff policies, which economists fear could exacerbate inflation and hinder the Federal Reserve’s ability to implement further interest rate cuts.
This distressing report coincided with the Commerce Department’s announcement of a core inflation rate rise to 2.8% in February, following a monthly gain of 0.4%—the most substantial increase since January 2024.
Additionally, anxieties regarding the labor market were reflected in the survey, highlighting a rising expectation for increased unemployment rates, noted as the highest since 2009.
The market reacted negatively to the survey results, with the Dow Jones Industrial Average plummeting by more than 500 points.
Get Your Ticket to Pro LIVE
Join us at the New York Stock Exchange!
In today’s dynamic financial landscape, access to expert insights is paramount. As a Finance Newso Pro subscriber, we invite you to join us for our first exclusive, in-person Finance Newso Pro LIVE event at the iconic NYSE on Thursday, June 12.
Join interactive Pro clinics led by our Pros Carter Worth, Dan Niles and Dan Ives, along with a special edition of Pro Talks featuring Tom Lee. Network with Finance Newso experts, talent, and fellow Pro subscribers at an exciting cocktail hour on the legendary trading floor. Tickets are limited!
