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

The University of Michigan on Friday (3-31-23) released the final results of its Consumer Sentiment Index (CSI) for March:

• The Index of Consumer Sentiment declined to a reading of 62.0 in March, down from 67.0 in February. This is a month-over-month decrease of 7.5% but up 4.4% year-over-year (59.4 in March 2022).
• The Current Economic Conditions fell to a reading of 66.3 in March, down from 70.7 in February. This is a month-over-month decline of 6.2% and down 1.3% year-over-year (67.2 in March 2022).
• The Index of Consumer Expectations declined to a reading of 59.2 in March, down from 64.7 in February. This is a month-over-month drop of 8.5% but up 9.0% year-over-year (54.3 in March 2022).

In remarks and analysis prepared to accompany the release of the final March CSI, Dr. Joanne Hsu, Director of Surveys for the University of Michigan, said:

“Consumer sentiment fell for the first time in four months, dropping about 8% below February but remaining 4% above a year ago. This month’s turmoil in the banking sector had limited impact on consumer sentiment, which was already exhibiting downward momentum prior to the collapse of Silicon Valley Bank. Overall, our data revealed multiple signs that consumers increasingly expect a recession ahead. While sentiment fell across all demographic groups, the declines were sharpest for lower-income, less-educated, and younger consumers, as well as consumers with the top tercile of stock holdings. All five index components declined this month, led by a notably sharp weakening in one-year business conditions.

Year-ahead inflation expectations receded from 4.1% in February to 3.6%, the lowest reading since April 2021, but remained well above the 2.3–3.0% range seen in the two years prior to the pandemic. Long-run inflation expectations came in at 2.9% for the fourth consecutive month and stayed within the narrow 2.9–3.1% range for 19 of the last 20 months.”