U.S. Consumer Sentiment Deteriorates Sharply in March

Today at 12:34 pm

2436 posts

U.S. Consumer Sentiment Deteriorates Sharply in March/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ U.S. consumer sentiment took a sharp dive in March, with the University of Michigan’s Consumer Sentiment Index dropping to 57.9 from 64.7 in February. Concerns over President Trump’s aggressive tariff policies, which have triggered a trade war with key partners like China, Canada, and the EU, have fueled inflation fears. A Reuters/Ipsos poll shows that 57% of Americans believe Trump’s economic policies are too erratic, adding to uncertainty in the markets.

A man arranges produce at Best World Supermarket in the Mount Pleasant neighborhood of Washington, D.C., U.S., August 19, 2022.

US Consumer Sentiment Quick Looks:

Sentiment Decline: The Consumer Sentiment Index fell to 57.9, wiping out post-election gains.
Inflation Fears: 12-month inflation expectations jumped to 4.9% from 4.3% in February.
Tariff Impact: Trump’s trade war, including a threatened 200% tariff on European alcohol, has raised economic concerns.
Stock Market Turmoil: Market selloffs fueled by tariff uncertainty have further dampened consumer confidence.
Public Concern: 53% of Americans believe the trade war will do more harm than good, according to a Reuters/Ipsos poll.

U.S. Consumer Sentiment Deteriorates Sharply in March

Deep Look:

Consumer Sentiment Sinks Amid Economic Uncertainty

Americans are increasingly worried about the state of the economy as consumer sentiment tumbled in March, reflecting growing fears of inflation, market volatility, and trade disruptions.

The University of Michigan’s Consumer Sentiment Index dropped to 57.9 from 64.7 in February, erasing all confidence gains since Trump’s election victory in November. Economists had expected a smaller decline to 63.1, making the sharp drop even more concerning.

Inflation Concerns on the Rise

Rising inflation expectations have contributed to the negative outlook. Consumers now anticipate:

4.9% inflation over the next year, up from 4.3% in February.
3.9% inflation over the next five years, compared to 3.5% previously.

The inflation fears stem largely from Trump’s aggressive trade policies, which have imposed tariffs on key imports from Canada, China, and the EU. These trade restrictions have driven up prices for goods and created uncertainty in global markets.

Trade War Escalation and Market Reactions

Trump’s tariff strategy has rattled global markets, leading to stock selloffs and economic uncertainty. On Thursday, the president threatened to impose a 200% tariff on European wine and cognac imports, escalating tensions with the European Union.

The back-and-forth nature of tariff suspensions and reimpositions has further destabilized financial markets, making it difficult for businesses and consumers to plan ahead.

Public Perception: Are Trump’s Policies Too Unstable?

A Reuters/Ipsos poll conducted March 11-12 highlights growing public skepticism toward Trump’s economic approach:

57% of Americans believe Trump’s economic policies, including deep federal budget cuts and government layoffs, are too erratic.
53% think the trade war will cause more economic harm than good.

The combination of higher prices, economic uncertainty, and stock market instability is driving consumer pessimism, raising concerns about whether the U.S. economy could be heading toward a downturn.