Zinger Key Points
- US consumer sentiment plunged to 57.9 in March, down 22% since December 2024.
- Long-term inflation expectations surged to 3.9%, marking the biggest rise since 1993.
Consumer confidence in the U.S. plunged to its lowest level in four months, raising concerns about a slowing economy and persistent inflation, according to data released Friday by the University of Michigan.
With inflation expectations jumping to their highest level in decades, fears of a stagflationary environment—where growth stagnates while inflation remains elevated—are mounting.
The University of Michigan said its preliminary March Consumer Sentiment Index fell from February’s 64.7 to 57.9 points, well below economists’ expectations of 63.1. This marks an 11% monthly drop and a staggering 22% decline from December 2024.
The report also showed that consumer expectations for future economic conditions plummeted, with the Consumer Expectations Index falling to 54.2 from 64.0, well below the 64.3 consensus forecast.
Meanwhile, the Current Conditions Index, which measures consumers’ assessment of their present financial situation, dropped slightly to 63.5 from 65.7.
Year-ahead inflation expectations jumped from 4.3% in February to 4.9% in March, the highest since November 2022.
Long-run inflation expectations surged from 3.5% to 3.9%, marking the largest increase since 1993.
University of Michigan Consumer Sentiment Survey – March 2025
| Indicator | March 2025 | February 2025 | Consensus Estimate (TradingEconomics) | Key Takeaway |
|---|---|---|---|---|
| Consumer Sentiment Index | 57.9 | 64.7 | 63.1 | Lowest level since November 2023, down 22% from December 2024. |
| Consumer Expectations Index | 54.2 | 64.0 | 64.3 | Lowest since July 2022 |
| Current Conditions Index | 63.5 | 65.7 | 65.0 | Four straight months of decline |
| 1-Year Inflation Expectations | 4.9% | 4.3% | N/A | Highest since November 2022 |
| 5-Year Inflation Expectations | 3.9% | 3.5% | N/A | Highest since March 1993 |
Chart: 5-Year Inflation Expectations Jump To A 32-Year High
What’s Driving the Decline In Confidence?
The report revealed that confidence deteriorated across all demographic and political groups.
Sentiment fell “consistently across all groups by age, education, income, wealth, political affiliations, and geographic regions,” Joanne Hsu, director of the Surveys of Consumers, said.
According to the survey, consumers are increasingly worried about inflation, business conditions, stock markets, and labor markets.
Frequent shifts in economic policy and uncertainty around government actions are making it increasingly difficult for consumers to plan for the future, Hsu said.
Even though Republicans initially felt more optimistic after the 2024 elections, their expectations index still fell 10% in March. Independents and Democrats reported even steeper declines of 12% and 24%, respectively.
The spike in both short-term and long-term inflation expectations could challenge the Federal Reserve’s plans for potential rate cuts in 2025, as persistent price pressures remain a top concern for consumers.
Market Reactions
The S&P 500 trimmed session gains following the UMich sentiment report. The index was up 1.5% before the release but moderated to a 0.7% increase by 10:15 a.m. ET.
Treasury yields were higher for the session, with the 10-year yield rising to 4.30%, reflecting concerns that persistent inflation could delay Fed rate cuts.
The U.S. dollar index dipped 0.1%, heading for its second consecutive week of declines.
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Originally Posted March 14, 2025 – US Consumer Confidence Plunges As Inflation Fears Hit Highest Level Since 1993
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Lol…U of Mich “survey” is obviously biased…as per usual. Inflation is DOWN..look at price of Gas,oil, eggs even ! Labor markets, stock markets….Lol…MsHu works for Soros…Lol.
Exactly !