The University of Michigan consumer sentiment for the US plunged to 57.9 in March 2025, the lowest since November 2022, from 64.7 in February and well below forecasts of 63.1, preliminary estimates showed.
US consumer sentiment sinks in March
Sentiment declined for a third straight month, with many consumers citing the high level of uncertainty around policy and other economic factors, including concerns over potential interest rate cuts, persistent geopolitical tensions, and volatility in financial markets.
While current economic conditions were little changed (53.5 vs. 65.7), expectations for the future deteriorated significantly (54.2 vs. 64) across multiple facets of the economy, including personal finances, labor markets, inflation, business conditions, and stock markets. The ongoing debate over fiscal policy, potential tax adjustments, and concerns about rising consumer debt levels have further weighed on sentiment.
Inflation expectations surged
Meanwhile, inflation expectations surged, with the year-ahead gauge rising to 4.9%, the highest reading since November 2022, from 4.3%. Consumers expressed heightened concerns over the impact of elevated prices on household budgets, particularly in essential categories such as food, housing, and energy. Additionally, inflation expectations for the next five years surged to 3.9% from 3.5% in February, marking the largest month-over-month increase since 1993. The sharp rise in long-term inflation expectations suggests that consumers are increasingly skeptical about the Federal Reserve’s ability to bring inflation under control in the near future.
As a result, the latest data underscores growing economic anxieties, which could influence consumer spending patterns, investment decisions, and broader market sentiment in the coming months. With inflation concerns mounting and economic uncertainty deepening, policymakers may face mounting pressure to provide clearer guidance on their policy trajectory.
