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Updated on March 27.
University of Michigan: Sentiment drops to lowest level since December
The University of Michigan’s Index of Consumer Sentiment fell by 3.3 points from February to March, according to the final results for the month released on March 27.
In a news release, Joanne Hsu, who directs consumer surveys at the University of Michigan, said the Iran war has already taken its toll on sentiment. “Consumers with middle and higher incomes and stock wealth, buffeted by both escalating gas prices and volatile financial markets in the wake of the Iran conflict, exhibited particularly large drops in sentiment,” she said.
The university’s Index of Current Economic Conditions registered at 53.3 in March, compared to February’s reading of 56.6, according to the survey. Current Economic Conditions was 55.8 in March, compared to 56.6 in February. The Index of Consumer Expectations registered at 51.7 for March, compared to 56.6 for February, and 1.7 points above the record low of 50 set in June 2022.
Here’s what Elizabeth Renter, NerdWallet’s senior economist, had to say about the report:
War worsens consumers’ feelings about the economy. This isn’t a shocking revelation. When we go to war, people anticipate worsening economic constraints, including higher prices. But they also anticipate volatility in their investments. That’s why, this time, the dip in consumer sentiment is being felt across higher incomes and those with stocks.
These groups have been fairly insulated from persistent economic glum, as asset growth has been robust over the past few years. Amid economic uncertainty and isolationist trade policies, people with wealth had some reassurance that their household positions could remain strong. War and a major shock to global energy supply puts that strength in jeopardy.
It’s this group — those with assets — that has been credited with keeping consumer spending aloft over the past few years as general uncertainty spread. As their sentiment falters, we may see greater cracks in those aggregate spending figures.
New York Fed: Labor expectations soften
The New York Fed’s Survey of Consumer Expectations for February, released on March 9, shows that inflation expectations declined in the short term, while labor expectations worsened slightly. Here’s what Renter had to say about the report:
Had this survey been fielded one day later, we might see bleaker results. The data collection period ended the day military action in Iran began, so we’re missing how this ongoing conflict will impact consumer sentiment. War generally isn’t good for how people feel about the economy. That said, folks weren’t feeling great before this war began.
People know job prospects are desolate, and don’t intend to leave their job in search of greener pastures. The likelihood of leaving one’s job voluntarily in the next year hit a series low this past month, and the likelihood of finding a new job if they lost their current one remains near the series low we hit in December.
There was a slight improvement in how people feel about their financial situations compared to a year ago, and a slight decrease in the likelihood of missing a debt payment. Both of these are positive changes, but positive changes from bleak positions don’t necessarily put us in “good” territory.
Households are under some financial pressure — both real and anticipated. Even if your financial conditions are stable at the moment, economic uncertainty can make you feel trepidation about the near-future. And economic certainty is difficult to come by these days. Changing policies, a chilled labor market and new military conflict all put some downward pressure on sentiment.
More findings below.
Conference Board: Confidence inches up in February
The Conference Board’s Consumer Confidence Index report for February (released on Feb. 24) went up by 2.2 points to 91.2 from an upwardly revised index of 89.0 in January.
“Confidence ticked up in February after falling in January, as consumers’ pessimistic expectations for the future eased somewhat,” said Dana M Peterson, chief economist at The Conference Board, in release.
The board’s Present Situation Index — measuring consumers’ current assessment of business and labor market conditions — fell by 1.8 points to 120.0 in February.
The Expectations Index — measuring consumers’ short-term outlook for income, business and labor market conditions — rose by 4.8 points to 72.0. The same index was at 54.4 in April 2025, the lowest level in nearly 14 years.
What is consumer sentiment?
Consumer sentiment, also known as consumer confidence, is an index of how U.S. consumers are feeling about the current and future state of the economy, and all that folds into the economy: the job market, wages, business conditions and their personal finances. It’s a valuable tool for economists, as consumer sentiment can be used as an early predictor of economic changes.
How people feel about the economy can directly impact the economy, because consumers' attitudes often affect how much they spend on things like food, transportation, household goods, entertainment and more.
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In 2023, consumers’ personal spending made up 67.9% of the U.S. GDP, or gross domestic product, according to the Federal Reserve Bank of St. Louis. That’s a significant majority of the nation’s GDP, so keeping a close eye on consumer sentiment is key in foreseeing potential economic slumps or rallies.
When the economy is in a recession, consumer sentiment falls. On the flip side, when the economy is expanding, consumer sentiment rises. The index does typically peak before a recession, though.
Unlike other indexes, such as the Consumer Price Index (CPI), consumer sentiment isn’t calculated using spending data or hard figures. Instead, economists rely on two major surveys of consumer confidence: The University of Michigan’s Surveys of Consumers and the Conference Board’s Consumer Confidence Survey.
Each survey collects the general attitudes and opinions of hundreds of U.S. consumers. Then, those opinions are assigned numeric values and aggregated into one number, or index.
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What is consumer sentiment like right now?
The University of Michigan’s Index of Consumer Sentiment
The final reading for March from the University of Michigan, released on March 27, shows:
- The Index of Consumer Sentiment registered at 53.3 for March, down from 56.6 for February.
- Current Economic Conditions registered at 55.8 for March, up from 56.6 for February.
- The Index of Consumer Expectations registered at 51.7 for March, down from 56.6 for February.
How the University of Michigan creates its index
The Index of Consumer Sentiment is one of three indexes derived from the University of Michigan’s Surveys of Consumers, which started in 1946. Originally conducted annually, the surveys switched to a monthly cadence in 1978. The surveys have a sample size of roughly 600 people selected randomly from the 48 adjoining U.S. states and the District of Columbia.
The surveys include roughly 50 questions covering personal finances, business conditions and buying conditions. From those surveyed, three indexes are produced: the Index of Consumer Sentiment, the Index of Consumer Expectations and the Index of Current Economic Conditions.
The Index of Consumer Sentiment is the most commonly cited index of the bunch. It’s derived from these five questions:
- "We are interested in how people are getting along financially these days. Would you say that you (and your family living there) are better off or worse off financially than you were a year ago?"
- "Now, looking ahead: Do you think that a year from now you (and your family living there) will be better off financially, or worse off, or just about the same as now?"
- "Now, turning to business conditions in the country as a whole. Do you think that during the next twelve months we'll have good times financially, or bad times, or what?"
- "Looking ahead, which would you say is more likely: that in the country as a whole we'll have continuous good times during the next five years or so, or that we will have periods of widespread unemployment or depression, or what?"
- "About the big things people buy for their homes, such as furniture, a refrigerator, stove, television, and things like that. Generally speaking, do you think now is a good or bad time for people to buy major household items?"
Historically, the surveys have been conducted by phone. Starting in July 2024, they'll be conducted online, with researchers aiming for 900 to 1,000 respondents.
The Conference Board’s Consumer Confidence Index
Conference Board data for February, released on Feb. 24 shows:
- The Conference Board’s Consumer Confidence Index rose 2.2 points in February to 91.2, from 89.0 in January.
- The Present Situation Index went down by 1.8 points to 120.0.
- The Expectations Index went up by 4.8 points to 72.0.
How the Conference Board’s Consumer Confidence Index comes together
The Conference Board’s Consumer Confidence Survey was launched in 1967 as a mail survey conducted every other month. Today, the survey is conducted online, on a monthly basis, with a sample size of roughly 3,000 respondents.
The Conference Board issues a five-question survey to calculate three distinct indexes: the Consumer Confidence Index, the Present Situation Index and the Expectations Index. Once the surveys have been completed, each question is given a relative value. Then, those values are compared against their relative values from 1985 — the survey’s benchmark year, with an index set at 100.
The Consumer Confidence Index is the average index for all five questions. The Present Situation Index is calculated using the average indexes for the first two questions, and the remaining three questions determine the Expectations Index.
Present Situation Index
- Respondents’ appraisal of current business conditions.
- Respondents’ appraisal of current employment conditions.
Expectations Index
- Respondents’ expectations regarding business conditions six months hence.
- Respondents’ expectations regarding employment conditions six months hence.
- Respondents’ expectations regarding their total family income six months hence.
Consumer Confidence Index
This is the average index for all five questions above.
The Federal Reserve Bank of New York’s Survey of Consumer Expectations
Some highlights for February from the Federal Reserve Bank of New York's Survey of Consumer Expectations, released on March 9:
- Inflation. Median inflation expectations fell by 0.1 percentage point to 3.0% at the one-year-ahead horizon and were unchanged at 3.0% for both the three-year and five-year horizons.
- Unemployment expectations. The mean probability that the unemployment rate will go up a year from now decreased by 2.0 percentage points to 39.9%.
- Probability of job loss. The mean expectation of job loss over the next 12 months fell by 1.0 percentage point to 13.8%.
- Probability of quitting. The mean expectation of quitting a job over the next 12 months fell by 2.8 percentage points to 15.9%, a new series low.
- Probability of finding a job if job loss occurs. The mean perceived probability of finding a job within three months after a job loss fell by 1.6 percentage points to 44.0%.
- Household income growth. The median expectation of household income growth remained unchanged at 2.9%.
- Household spending growth. Median nominal household spending growth expectations were unchanged at 4.9%.
How the Federal Reserve Bank of New York conducts its survey
The Federal Reserve Bank of New York’s Survey of Consumer Expectations focuses on expectations about economic outcomes.
The survey, which is conducted by NielsenIQ, launched in 2013. It’s an internet-based survey that asks a rotating panel of 1,300 heads-of-household about their expectations of the economy, as well as their own personal finances related to the following categories:
Inflation:
- Inflation expectations.
- Inflation uncertainty.
- Probability of different inflation outcomes.
- Home price change expectations.
- Home price change uncertainty.
- Commodity price change expectations.
Labor market:
- Earnings growth expectations.
- Earnings growth uncertainty.
- Job separation expectations.
- Job finding expectations.
- Moving expectations.
- Expectations of higher unemployment.
Household finance:
- Household income growth expectations. Household spending growth expectations. Change in taxes. Change in credit availability. Debt delinquency expectations. Expectations of higher interest rate on savings accounts. Household financial situation.Expectations of higher stock prices. Government debt growth expectations.
When do the next consumer sentiment reports come out?
The University of Michigan’s next set of results for its Surveys of Consumers will be released on Friday, April 10.
The Conference Board will release its next Consumer Confidence Survey on Tuesday, March 31.
The New York Fed will release its next Survey of Consumer Expectations on Tuesday, April 7.
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