Consumers increasingly expect a recession.
The University of Michigan’s monthly Surveys of Consumers noted this trend Friday (March 31) as it released final results that showed a bleaker picture than the preliminary results it released March 17.
The final results showed that consumer sentiment was 8% lower in March than it was during the previous month but 4% higher than it was a year ago. (The preliminary results had put those figures at 5% and 7%, respectively.)
This was the first drop in consumer sentiment recorded in four months, it occurred across all demographic groups and the decline was underway before the March 10 collapse of Silicon Valley Bank, according to the report.
“Overall, our data revealed multiple signs that consumers increasingly expect a recession ahead,” Surveys of Consumers Director Joanne Hsu said in the report.
Consumers’ year-ahead inflation expectations were gauged at 3.6% in the final results for March, lower than the 4.1% recorded in February and the lowest since April 2021. Still, this reading remained higher than the range of 2.3% to 3% that was noted in the two years before the pandemic, according to the report.
Looking further into the future, the final results for March for long-run inflation expectations came in at 2.9%, a figure within the range of 2.9% to 3.1% that has been seen for 19 of the last 20 months, the report said.
This report comes on the same day that the Bureau of Economic Analysis reported at least in headline terms — and as measured by the Personal Consumption Expenditures (PCE) price index — at least some inflationary headwinds are slowing.
As PYMNTS reported Friday, a slowing is not the same as a decline, so life keeps getting more expensive and the slowing is not enough to cheer consumers.
The Conference Board reported Tuesday (March 28) that its Consumer Confidence Index had risen slightly in March, from 103.4 to 104.2.
Its Expectations Index also rose — from 70.4 to 73 — but remained below 80, “which often signals a recession within the next year,” the board said.