Consumer sentiment fell 5.8% this month, ending a three-month positive streak and offsetting all gains recorded during that period, according to final March data from the University of Michigan. Consumer surveys Released Friday (March 27).
The index now stands 6.5% below its March 2025 level and 33% below its March 2024 record.
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Consumer Manager Surveys Joan Hsu It identified “rising gas prices and volatile financial markets” as key drivers of declining sentiment. The decline in sentiment was greater among middle- and upper-income consumers who own stocks, Hsu noted. About two-thirds of the interviews were completed after the start of the US military conflict in Iran.
Within the index, expectations showed the strongest decline, falling by 8.7% compared to the previous month, while perceptions of current conditions fell by 1.4%. However, compared to last year, it was the latter that fell the most by 12.5%, while the gap from the previous year was 1.7% relative to expectations. Overall, short-term economic expectations fell by 14%, and projected personal finances for next year fell by 10%, while the decline in long-term expectations was more muted.
Inflation expectations for next year rose from 3.4% in February to 3.8% this month, the largest single-month increase since April 2025 and well above the current 12-month CPI growth of 2.4%. Long-term inflation expectations remain largely stable at 3.2%. Hsu noted that for both time horizons, interviews conducted after February 28 (the beginning of US military intervention in Iran) showed higher inflation expectations than those conducted before that date.
As PMNTS male More recently, as overall inflation has begun to decline, pressures on major spending categories are having a disproportionate impact on perceptions, one such impact being gas. In fact, a group of researchers at Stanford University recently published a report condition It is estimated that the recent rise in gas prices may eventually offset the tax refunds consumers expect this year. It was reported on Thursday (March 26) that retailers are warning that a protracted war in Iran could mean Higher prices In stores.
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Turbulence in financial markets could also mean that the extra cash return on savings could disappear as well, according to the latest IMF poll. American Association of Individual Investors It appears that 50% of the survey participants are bearish In the stock market in the short term. This suggests that geopolitical noise can have immediate and tangible impacts on consumers’ daily lives.
