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U.S. Consumer Confidence Levels Drop For First Time In Four Months

U.S. Consumer Confidence Levels Drop For First Time In Four Months

The final confidence levels for March published in the Michigan Consumer Sentiment Index came in at 62.0, down 5.0 (negative 7.5 percent) from February—the first monthly decline the agency reported in the last four months, below’s forecast of 63.2.

The Michigan Consumer Sentiment Index is a monthly survey of U.S. consumer confidence levels regarding the economy, personal finances, business conditions, and buying conditions conducted by The University of Michigan. Two reports are released monthly—a preliminary report released mid-month and a final one released at the end of the month.

Joanne Hsu, the director of surveys, said, “Consumer sentiment fell for the first time in four months, dropping about 8 percent below February but remaining 4 percent above a year ago. This month’s turmoil in the banking sector had a limited impact on consumer sentiment, which was already exhibiting downward momentum prior to the collapse of Silicon Valley Bank. Overall, our data revealed multiple signs that consumers increasingly expect a recession ahead. While sentiment fell across all demographic groups, the declines were sharpest for lower-income, less-educated, and younger consumers, as well as consumers with the top tercile of stock holdings. All five index components declined this month, led by a notably sharp weakening in one-year business conditions.

“Year-ahead inflation expectations receded from 4.1 percent in February to 3.6 percent, the lowest reading since April 2021 but remained well above the 2.3 to 3.0 percent range seen in the two years prior to the pandemic. Long-run inflation expectations came in at 2.9 percent for the fourth consecutive month and stayed within the narrow 2.9 to 3.1 percent range for 19 of the last 20 months,” concluded Hsu.