US consumer confidence took another sharp downturn in March, with University of Michigan Consumer Sentiment Index falling from 64.7 to 57.9, well below expectations of 63.8. Current conditions dipped slightly from 65.7 to 63.5, but Expectations saw a much steeper fall from 64.0 to 54.2.
Of particular concern is the dramatic jump in inflation expectations. Year-ahead inflation expectations rose from 4.3% to 4.9%, the highest level since November 2022. This marks the third consecutive month of unusually large increases of 0.5 percentage points or more, suggesting that consumers are beginning to view inflation as a more entrenched issue.
Even more alarming, long-term inflation expectations surged from 3.5% to 3.9%, the largest month-over-month increase since 1993.
The report also revealed a rare bipartisan consensus regarding the weakening economic outlook. The University of Michigan noted that consumers across all political affiliations cited uncertainty over policy and economic conditions as a major concern, making it difficult to plan for the future.
Even among Republicans, who had shown greater confidence following the election, expectations dropped by 10%. Independents and Democrats posted even steeper declines of 12% and 24%, respectively.
Full University of Michigan Consumer Sentiment release here.
