Americans sour on economy as inflation expectations hit highest level since 1991

Consumer sentiment tumbled in March as the impacts of President Donald Trump’s tariff policies and elevated price increases remain top concerns for Americans.

The latest University of Michigan consumer sentiment survey released Friday showed sentiment hit its lowest level since November 2022. The index slid to a reading of 57.9, below the 64.7 seen last month and the 63 expected by economists.

Pessimism over the inflation outlook soared again in March as one year-inflation expectations jumped to 4.9% from 4.3% the month prior. Just two months ago, consumers had only expected inflation of 3.3% over the next year.

Long-run inflation expectations, which track expectations over the next five to 10 years, climbed, too, hitting 3.9% in March, up from 3.4% in February. This marks the highest level of long-term inflation expectations since 1991. Also in the release, the expected change in unemployment hit its lowest level since the Great Financial Crisis.

“While current economic conditions were little changed, expectations for the future deteriorated across multiple facets of the economy, including personal finances, labor markets, inflation, business conditions, and stock markets,” University of Michigan Survey of Consumers director Joanne Hsu said in the release. “Many consumers cited the high level of uncertainty around policy and other economic factors.”

Hsu added that frequent gyrations in economic policies make it “very difficult” for consumers to plan for the future and therefore weigh on sentiment. The recent tumble in consumer sentiment has come as the new Trump administration has slapped tariffs on imports from multiple countries but frequently flip-flopped on what the actual tariff rates will be and when they’ll be implemented. The European Union and Canada have now also threatened retaliatory tariffs on the United States.

The tariff back-and-forth largely hasn’t hit incoming inflation data yet. Earlier this week, a report from the Bureau of Labor Statistics showed that its “core” Producer Price Index (PPI) — which tracks the price changes companies see and excludes food and energy — rose 3.4% from the year prior, down from the 3.6% seen in January. The day before, the bureau’s Consumer Price Index (CPI) showed core prices rose 3.1% in February, the lowest yearly increase in core CPI since April 2021.

Capital Economics assistant economist Harry Chambers noted that given recent data, the increase in inflation expectations seen in Friday’s survey was “entirely consumers’ increasing concerns about the impact of tariffs.”