US consumer sentiment has dropped by 11% in March, with Americans growing increasingly worried about inflation and economic uncertainty. The latest survey from the University of Michigan shows that consumers are losing confidence in the economy, job market, and personal finances. This is the third consecutive month of decline, with sentiment falling 22% since December.
According to Joanne Hsu, director of Surveys of Consumers at the University of Michigan, policy uncertainty and economic fluctuations make it difficult for consumers to plan for the future. The survey also found that consumers now expect inflation to rise to 4.9% over the next 12 months, up from a previous forecast of 4.3%. Expectations for five-year inflation have also jumped to 3.9%, the largest monthly increase since 1993.
Economists, including Samuel Tombs at Pantheon Macroeconomics, are concerned about the implications of this trend. They point to President Trump’s plans to reshape global trade and alter immigration policies as potential causes of economic uncertainty. The survey highlights a partisan divide, with Republicans optimistic about the economy but Democrats more pessimistic.
The Federal Reserve is closely monitoring consumer sentiment data, particularly inflation expectations, as it assesses its grip on inflation. Fed Chair Jerome Powell has cautioned that policy uncertainty and tariffs could dent growth overall. However, with interest rates expected to remain steady next week, the central bank appears prepared for a potential increase in inflation or economic slowdown if needed.
Source: https://www.nytimes.com/2025/03/14/business/inflation-consumer-sentiment.html