Since 1991, Americans are sour to the economy as inflation expectations reach their highest levels
Consumer sentiment fell in March due to President Donald’s influence Trump’s tariff policy and Price rise It remains the highest concern for Americans.
The latest University of Michigan Consumer Sentiment Survey Released on Friday, it showed that sentiment has reached its lowest level since November 2022. The index slid to a reading of 64.7 seen last month, 57.9, below the 63 economists expect.
Pessimism over the inflation outlook spiked again in March as the year-round forecast jumped from 4.3% a month ago to 4.9%. Just two months ago, consumers had only expected 3.3% inflation from next year.
Long-term inflation expectations tracking expectations over the next five to ten years have also risen, reaching 3.9% in March, up from 3.4% in February. This marks the highest level of long-term inflation expectations since 1991. Additionally, the release has seen an expected change in unemployment rate. The lowest level since the major financial crisis.
“While the current economic situation has remained largely unchanged, expectations for the future have deteriorated across multiple aspects of the economy, including personal finances, labor markets, inflation, business conditions and stock markets,” said Joanne Hussou, director of consumer research at the University of Michigan, in the release. “Many consumers cited a high level of uncertainty about policy and other economic factors.”
HSU added that due to the frequent turnover of economic policies, it is “very difficult” for consumers to plan their futures and therefore consider their emotions. The recent consumer sentiment has been slapping tariffs on imports from multiple countries, but frequently flip-flops about what the actual tariff rates are and when they will be implemented. The European Union and Canada are currently threatening retaliatory tariffs against the United States.
Round-trip tariffs have not yet collided with incoming inflation data. Earlier this week, a report from Labor Statistics Bureau The “core” producer price index (PPI) tracks the price changes seen by businesses and excludes food and energy — showed an increase of 3.4% from the previous year, up from 3.6% seen in January. The previous day, the bureau’s consumer price index (CPI) showed that core prices rose 3.1% in February. The lowest annual increase in core CPI since April 2021.
Harry Chambers, assistant capital economics economist, said the rise in inflation expectations seen in Friday’s survey was “a full increase in consumer concerns about the impact of tariffs.”
