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

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

• The Index of Consumer Sentiment declined to a reading of 57.9 in March, down from 64.7 in February. This is a month-over-month decline of 10.5% and down 27.1% year-over-year (79.4 in March 2024).
• Current Economic Conditions for March declined to a reading of 63.5, down from 65.7 in February. This is a month-over-month decline of 12.5% and down 17.3% year-over-year (82.5 in March 2024).
• The Index of Consumer Expectations declined a reading of 54.2 in March, down from 64.0 in February. This is a month-over-month decrease of 15.3% and down 30.0% year-over-year (77.4 in March 2024).

In remarks and analysis accompanying the report, Surveys of Consumers Director Joanne Hsu said,

“Consumer sentiment slid another 11% this month, with declines seen consistently across all groups by age, education, income, wealth, political affiliations, and geographic regions. Sentiment has now fallen for three consecutive months and is currently down 22% from December 2024. While current economic conditions were little changed, expectations for the future deteriorated across multiple facets of the economy, including personal finances, labor markets, inflation, business conditions, and stock markets. Many consumers cited the high level of uncertainty around policy and other economic factors; frequent gyrations in economic policies make it very difficult for consumers to plan for the future, regardless of one’s policy preferences. Consumers from all three political affiliations are in agreement that the outlook has weakened since February. Despite their greater confidence following the election, Republicans posted a sizable 10% decline in their expectations index in March. For Independents and Democrats, the expectations index declined an even steeper 12 and 24%, respectively.

Year-ahead inflation expectations jumped up from 4.3% last month to 4.9% 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 3.9% in March. This is the largest month-over-month increase seen since 1993, stemming from a sizable rise among Independents, and followed an already-large increase in February.”