University of Michigan Reports 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 slightly to a reading of 76.5, down from 76.9 in February. This is a month-over-month decline of 0.5% but up 23.4% year-over-year (62.0 in March 2023).
• Current Economic Conditions was unchanged from February, holding at a reading of 79.4. However, this is up 19.8% year-over-year (66.3 in March 2023).
• The Index of Consumer Expectations declined to a reading of 74.6 in March, down from 75.2 in February. This is a month-over-month decline of 0.8% but up 26.0% year-over-year (59.2 in March 2023).

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

“Consumer sentiment moved little this month with a 0.4 index point decrease that is well within the margin of error, and thus sentiment has been steady and essentially unchanged since January 2024. Sentiment remained almost 25% above November 2023 and is currently halfway between the historic low reached during the peak of inflation in June 2022 and pre-pandemic readings. Small improvements in personal finances were offset by modest declines in expectations for business conditions. After strong gains between November 2023 and January 2024, consumer views have stabilized into a holding pattern; consumers perceived few signals that the economy is currently improving or deteriorating. Indeed, many are withholding judgment about the trajectory of the economy, particularly in the long term, pending the results of this November’s election.

Year-ahead inflation was unchanged from February at 3.0%. For the third straight month, short-run inflation expectations have fallen within the 2.3–3.0% range seen in 2018 and 2019. Long-run inflation expectations remained at 2.9% for the fourth straight month, staying within the narrow 2.9–3.1% range for 29 of the last 32 months. Long-run inflation expectations have been modestly elevated relative to the 2.2–2.6% range seen in the two years pre-pandemic.”