Policy uncertainty and tariff whiplash are making consumers less confident about the economic outlook and more worried about inflation, new data from the University of Michigan showed on Friday, the latest evidence that Americans are bracing for pain in President Trump’s second term.
A new survey released on Friday showed consumer sentiment plummeting 11 percent in March as Americans of all ages, income groups and political affiliations turned even more downbeat about the trajectory for the economy. Consumer confidence has fallen for the third consecutive month, not only about personal finances, but also the job market and stock markets. Since December, sentiment has tumbled 22 percent.
“Many consumers cited the high level of uncertainty around policy and other economic factors; frequent gyrations in economic policies make it very difficult for consumers to plan for the future, regardless of one’s policy preferences,” said Joanne Hsu, director of the Surveys of Consumers at the University of Michigan.
Consumers also revised up their expectations for inflation, both for the year ahead and over a five-year horizon. Over the next 12 months, consumers expect inflation to rise to 4.9 percent, up from a forecast for 4.3 percent last month. Over the longer run, expectations rose to 3.9 percent in what was the largest monthly jump since 1993. According to the latest Consumer Price Index report, inflation stands at 2.8 percent.
“This is an horrific report,” said Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics. “Elevated economic policy uncertainty and the sharp drop in stock prices have greatly undermined consumers’ confidence.”
The preliminary data comes as President Trump and his top economic advisers have acknowledged that the president’s plans to reshape global trade through aggressive tariffs, to right size government spending and to alter the American immigration system, among other sweeping changes could hurt the economy or even push it into a recession.