Consumers Haven’t Felt This Bad About the Economy Since 2022

For consumers, it’s starting to feel like 2022 again as inflation worries mount and uncertainty over the economy grows. 

The Michigan Consumer Sentiment index fell to 57.9 in its preliminary March survey, down from 64.7 last month. It was the lowest reading since November 2022, after inflation spiked as the economy reopened following the pandemic shutdowns. 

Economists surveyed by The Wall Street Journal and Dow Jones Newswires expected a more modest decline in March. Optimism rose following the November election but has since fallen as tariff threats from President Donald Trump have rattled markets. This is the third month that consumer sentiment has declined.

“Consumer sentiment fell further in March as rising uncertainty in the economy threatens to take the wind out of the sails of the consumer sector,” wrote Nationwide Economist Daniel Vielhaber.

Inflation Expectations Soar on Tariff Fears

Inflation expectations are helping to drag down sentiment as consumers have factored in higher-than-usual price increases for the year ahead in each of the past three months. Consumers anticipated annual cost increases of 4.9% in March, compared to 4.3% in last month. 

While consumers’ view of current economic conditions dipped only slightly from last month, their economic expectations for the future fell sharply. Survey respondents raised worries about their personal finances, the labor market, inflation, business conditions and stock markets, said Surveys of Consumers Director Joanne Hsu

“Many consumers cited the high level of uncertainty around policy and other economic factors; frequent gyrations in economic policies make it very difficult for consumers to plan for the future, regardless of one’s policy preferences,”  Hsu said. 

Consumer sentiment has been in focus lately as retailers report softening spending while inflation expectations continue to rise.  Sentiment surveys generally improve after elections as uncertainty declines, but Trump’s frequent tariff announcements have roiled markets and heightened consumer fears over higher prices.

Politics didn’t play as much of a role in the declining sentiment as it has in past surveys, with sentiment declining across all party affiliations.