Key insights
- U.S. consumer sentiment fell in March to its lowest level since December, driven by concerns over the economic impact of the Iran war, particularly among higher-income households with stock wealth. While short-term economic outlook and personal finance expectations declined sharply, long-run expectations saw a more subdued dip, suggesting consumers don't anticipate lasting negative effects unless the conflict protracts or energy prices fuel broader inflation. This could signal near-term equity market weakness.
Investing.com - U.S. consumer sentiment has slumped to its lowest level since December, although American households do not appear to expect the impact of the Iran war on inflation and growth to persist in the long term, a survey from the University of Michigan found on Friday.
The final reading of survey's sentiment index for March fell to 53.3, from 56.6 in February. While this was the lowest mark of the year so far, it was still above lows plumbed last year, when consumers were wrangling with uncertainty around President Donald Trump's sweeping tariff policies.
Consumers with middle and higher incomes and stock wealth, despite recently being viewed by some economists as the drivers of the overall economy, were especially buffeted by both escalating gasoline-pump prices and volatile financial markets following the start of the joint U.S.-Israeli assault on Iran in late February. The cohort "exhibited particularly large drops in sentiment," said Joanne Hsu, Surveys of Consumers Director at the University of Michigan, in a statement.
Overall, the short-run economic outlook and year-ahead expectations for personal finances declined sharply, but the dip in long-run expectations were "more subdued," Hsu said.
"These patterns suggest that, at this time, consumers may not expect recent negative developments to persist far into the future. These views are subject to change, however, if the Iran conflict becomes protracted or if higher energy prices pass through to overall inflation," Hsu added.