University of Michigan Releases Final Results of Its Consumer Sentiment Index for March

On Friday, the University of Michigan released the final results of its Surveys of Consumers for March.

• The Index of Consumer Sentiment declined to a reading of 57.0 in March, down from 64.7 in February. This is a month-over-month decline of 11.9% and down 28.2% year-over-year (79.4 in March 2024).
• Current Economic Conditions declined to a reading of 63.8 in March, down from 65.7 in February. This is a month-over-month decline of 2.9% and down 22.7% year-over-year (82.5 in March 2024).
• The Index of Consumer Expectations declined to a reading of 52.6 in March, down from 64.0 in February. This is a month-over-month decrease of 17.8% and down 32.0% year-over-year (77.4 in March 2024).

Adding background and analysis to the report, Surveys of Consumers Director Joanne Hsu said:

“Consumer sentiment confirmed its early month reading and fell for the third straight month, plummeting 12% from February. The expectations index plunged a precipitous 18% and has now lost more than 30% since November 2024. This month’s decline reflects a clear consensus across all demographic and political affiliations; Republicans joined independents and Democrats in expressing worsening expectations since February for their personal finances, business conditions, unemployment, and inflation. Consumers continue to worry about the potential for pain amid ongoing economic policy developments. Notably, two-thirds of consumers expect unemployment to rise in the year ahead, the highest reading since 2009. This trend reveals a key vulnerability for consumers, given that strong labor markets and incomes have been the primary source of strength supporting consumer spending in recent years.

Year-ahead inflation expectations jumped up from 4.3% last month to 5.0% this month, the highest reading since November 2022 and marking three consecutive months of unusually large increases of 0.5 percentage points or more. This month’s rise was seen across all three political affiliations. Long-run inflation expectations surged from 3.5% in February to 4.1% in March, reflecting from a large surge among independents plus a sizable rise among Republicans. Here, as is the case for other measures from the Surveys of Consumers, aggregate trends are driven by and align closely with the views of independents and thus are not being swung by polarization across the two major parties.”