American consumer confidence deteriorated further in March, with the University of Michigan's final sentiment index declining to 57.0 from a preliminary reading of 57.9 and well below the February final of 64.7. The print marks the lowest consumer confidence reading since September 2025 and extends a streak of deteriorating sentiment that surveys attribute heavily to tariff-related anxiety among households.
The most striking figure in the report was the one-year inflation expectations component, which surged to 5.0% — the highest level since the peak inflation period of mid-2022. The five-to-ten year inflation expectations measure also moved higher, rising to 4.1%, in a development that could unsettle Federal Reserve officials who watch long-run inflation expectations as a key indicator of inflation psychology anchoring.
Survey director Joanne Hsu noted that tariff concerns were explicitly cited by an unusually high share of respondents as the primary factor weighing on their financial outlook. Both Republicans and Democrats reported deteriorating sentiment, though the divergence between partisan groups — which had widened significantly after the 2024 election — narrowed somewhat as trade policy concerns transcended political affiliation.
The current conditions index fell to 63.8 from 65.7 previously, while the expectations component dropped to 52.6 — its lowest reading in over three years. The expectations sub-index is considered a more forward-looking indicator of spending intentions, and its persistent decline raises questions about whether consumer spending will hold up through the balance of 2026 as tariff impacts on prices materialize.
Consumer discretionary stocks, which had been broadly outperforming on the back of the strong labor market data earlier in the week, gave back gains Friday following the sentiment release. Retailers with significant exposure to imported goods — including home furnishings, electronics, and apparel — saw the sharpest declines as investors priced in the dual risk of higher merchandise costs and a less willing consumer.
Economists note the tension between the hard data — low jobless claims, GDP growth, rising incomes — and the soft data like sentiment surveys, which have turned notably more pessimistic. Historically, hard data has been a more reliable predictor of actual consumer spending, but a sustained decline in sentiment that eventually feeds through to spending decisions remains a material downside risk for the economic outlook and corporate earnings in the back half of 2026.