Consumer sentiment index: Americans lose confidence in the economy as Trump’s tariff policy exacerbates inflation and pushes consumer sentiment to 2 years

The University of Michigan’s consumer sentiment index accounted for 57.9 in March, marking a 10.5% drop in February, and there are no forecasts from economists. The reading is the lowest since November 2022, which has exacerbated growing anxiety about inflation and market volatility. The year-on-year inflation outlook soared to 4.9%, the highest in 16 months, while the five-year expectation reached 3.9%, a level not seen since 1993.

Bipartisan melancholy and tariff turbulence

Cross-party concerns, sentiment has dropped by 22% since December. Republicans, Democrats and independents have all reported lower confidence due to uncertainty over Trump’s trade transfers, including steel/aluminum tariffs and a 200% levy of EU wine. Investigation Director Joanne Hsu pointed out that frequent policy shifts make it difficult for consumers to plan regardless of political inclinations. Meanwhile, conflicting data chaotic waters: While inflation fears soar, recent reports show growing prices and steady wholesale costs in February.
The market shrugged to a large extent as stocks remained stable and the Treasury yields rose. Now, investors are watching the Fed’s next move, with interest rates expected to remain stable this week, but priced at 0.75% by the end of the year, possibly starting in June.

FAQ:

Why did consumer sentiment decline in March?
Worries about rising inflation, stock market downturns and uncertainty about Trump’s trade tariffs have prompted a sharp decline in all political groups.

How do tariffs affect the economic outlook?
New tariffs on metals and alcohol impositions threatening the EU have increased consumer anxiety, leading to higher expectations of inflation and higher economic planning challenges.