Consumer sentiment plunges to 2-year low amid tariff and inflation worries
U.S. consumer sentiment fell to a low of more than two years in March, with preliminary instruments released by the University of Michigan proving that it is much weaker than economists expected.
Preliminary results exhibit According to Friday’s report, the index fell to 57.9, compared to 64.7 a month ago. The data reads the lowest readings since November 2022, researchers said. According to Financial Data company Factset, economists expect consumer confidence to be relatively stable.
Carl Weinberg commented on high-frequency economics that the result is “reflecting the great uncertainty of economic policies proposed by the Trump administration.” “Consumer spending may be subject to caution until Trump’s economic agenda becomes clear.”
The White House “policy uncertainty has peaked since inflation reached more than two years, putting the stock market in corrective areas and causing forecasters to substantially increase policy uncertainty about the probability of recession, which has brought consumer sentiment to a minimum.”
More Americans expressed concern
Consumers expect annual inflation to climb to 4.9% next year, the highest expectations since 2022. Slightly relieved In February, more and more Americans expressed concern about the economic impact of President Trump’s ongoing trade war because of tariffs It’s import tax Payments are made by companies like Walmart and Target, which are often passed to consumers at higher prices.
“The headlines of layoffs, stock market declines and tariff concerns have a lot of confidence in consumers,” Bill Adams, chief economist at Comerica Bank, said in an email. “The pullback in confidence is becoming a real threat to consumer spending, which is typically two-thirds of U.S. economic activity.”
The survey found that consumers also expect higher inflation rates to be a long-term problem, with prices expected to rise at a rate of 3.9% per year over the next five to ten years, the biggest monthly increase since 1993. This is much higher than the Fed’s inflation target, even if the annual rate drops to 2%.
