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The preliminary consumer sentiment index dropped to 57.9 in March, down 10.5 percent from February, a survey from the University of Michigan said on Friday, Mar. 14. It marks the lowest reading since November 2022 and 27.1 percent lower than March 2024.
The decline marks the third consecutive month of falling confidence, with all age groups, income levels, and political backgrounds reporting a more negative outlook.
"Consumers from all three political affiliations are in agreement that the outlook has weakened since February," said Joanne Hsu, director of Michigan's Surveys of Consumers. "Despite their greater confidence following the election, Republicans posted a sizable 10 percent decline in their expectations index in March. For independents and Democrats, the expectations index declined an even steeper 12 and 24 percent, respectively."
The consumer expectations index, which tracks future outlook, plummeted 15.3 percent from February and is now 30 percent lower than in March 2024. While views on current economic conditions were largely unchanged, expectations for the future collapsed, reflecting growing pessimism about personal finances, labor markets, and the nation's economy.
Survey respondents also expressed major concerns over President Donald Trump's economic policy moves, especially his constantly changing tariff threats.
"Many consumers cited the high level of uncertainty around policy and other economic factors," said Hsu. "Frequent gyrations in economic policies make it very difficult for consumers to plan for the future, regardless of one's policy preferences."
The plummeting consumer sentiment was echoed by The Conference Board. In February, the business research nonprofit's Consumer Confidence Index saw its steepest decline since August 2021, while the Expectations Index fell below the recession-warning threshold of 80 points for the first time since mid-2024.
A weakening labor market has also fueled recession fears, with private-sector hiring in February hitting a seven-month low. Compounding the issue are the mass layoffs in the federal workforce spearheaded by billionaire Elon Musk through the Department of Government Efficiency.
Inflation concerns are also mounting, with the Michigan survey finding that year-ahead inflation expectations surged to 4.9 percent in March. That was up from 4.3 percent in February and the highest reading since November 2022.
Long-term inflation expectations jumped to 3.9 percent, the biggest month-over-month spike since 1993. The worries come despite inflation rising slightly less than economists expected in February, according to the Bureau of Labor Statistics.
Home builders also warn that Trump's tariffs could push new house prices up by as much as $10,000. The housing market is already under pressure, with the median home price climbing 4.8 percent year-over-year to $396,900 in January.
The Michigan survey's final March consumer sentiment report will be released on Friday, Mar. 28.
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