The index of consumer sentiment for the month was 5% lower than it was in February but 7% higher than where it sat in March 2022, according to preliminary results from the University of Michigan’s monthly Surveys of Consumers, which were released Friday (March 17).
“Sentiment declines were concentrated among lower-income, less-educated and younger consumers, as well as consumers with the top tercile of stock holdings,” Surveys of Consumers Director Joanne Hsu said in the report.
The decline in consumer sentiment was the first recorded by the survey in four months, and it happened before the failure of Silicon Valley Bank. About 85% of the interviews had been completed before the bank’s collapse, Hsu said.
Hsu attributed the decline primarily to persistently high prices.
The surveys also found that consumers are more optimistic that inflation will slow, though they remain more pessimistic about that than before the pandemic.
Advertisement: Scroll to Continue
Consumers’ year-ahead inflation expectations were the lowest seen since April 2021. They stood at 3.8% in March, down from 4.1% in February but above the range of 2.3% to 3.0% seen in the two years before the pandemic.
Their long-run inflation expectations dipped to 2.8% in March. That marked only the second time in 20 months that the reading was lower than the range of 2.9% to 3.1%. Still, that figure remains higher than the range of 2.2% to 2.6% that was seen in the two years before the pandemic.
“With ongoing turbulence in the financial sector and uncertainty over the Fed’s possible policy response, inflation expectations are likely to be volatile in the months ahead,” Hsu said in the report.
PYMNTS research has found that 40% of consumers expect their finances to improve this year — a figure that is seven percentage points higher than the 33% recorded in July 2022.
Consumers believe that they will have less debt to service as the year progresses, according to “New Reality Check: The Paycheck-to-Paycheck Report: The Economic Outlook and Sentiment Edition,” a PYMNTS and LendingClub collaboration.
