In March, consumer sentiment regarding the economy experienced a decline, while inflation expectations edged upward, driven by apprehensions surrounding the ramifications of the conflict with Iran, as reported by the University of Michigan’s prominent survey. The Survey of Consumers for the end of March recorded a headline reading of 53.3, reflecting a decline of 5.8% from February and 6.5% from the same period last year. Economists anticipated a figure of 54.0. The survey revealed a decline in the current conditions index, which decreased by 1.4% to 55.8, while the expectations index experienced a significant drop to 51.7, reflecting an 8.7% decrease.

Regarding inflation expectations, the one-year outlook increased to 3.8%, reflecting a rise of 0.4 percentage points from February, although it remains below the January figure. The five-year outlook has decreased to 3.2%. The inflation readings suggested increased concern regarding price levels, although they generally indicated that no significant spikes are anticipated despite the rise in energy costs. For instance, a year prior, the one-year forecast stood at 5%, approximately twice the present rate of consumer price index inflation.

Joanne Hsu noted, “These patterns suggest that, at this time, consumers may not expect recent negative developments to persist far into the future. These views are subject to change; however, if the Iran conflict becomes protracted or if higher energy prices pass through to overall inflation.”