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Updated on March 31.
Findings from the three major consumer sentiment indexes show a mixed picture as the effects of the Iran war set in at the same time tax refunds begin to land.
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.
Conference Board: Confidence inches up in March
The Conference Board’s Consumer Confidence Index report for March (released on March 31) ticked up by 0.8 point to 91.8 from an revised index of 91.0 in February.
“Consumer confidence ticked up again in March, as a modest improvement in consumers’ views of current conditions outweighed a slight downshift in expectations for the future,” said Dana M Peterson, chief economist at The Conference Board, in a release. “Nonetheless, the Index has been on a general downward trend since 2021.”
The board’s Present Situation Index — measuring consumers’ current assessment of business and labor market conditions — increased by 4.6 points to 123.3 in March.
The Expectations Index — measuring consumers’ short-term outlook for income, business and labor market conditions — fell by 1.7 points to 70.9. The same index was at 54.4 in April 2025, the lowest level in nearly 14 years.
Here’s what Renter had to say about the report:
This survey is fielded roughly through the midpoint of the month, so we’re getting responses impacted by the war in Iran, and one would expect to see a decline in sentiment as a result. Consumers’ read on current conditions actually improved, however, while their expectations for the future suffered.
The headline current economic sentiment figure for the month showed some improvement, but this figure should be viewed in context. Sentiment has still not recovered from the pandemic, not even close. And the blip in this and last month’s data could be the result of some households reaping the benefits of filing their taxes — the IRS has processed about $203 billion in refunds so far this season.
Tax season this year will benefit many, as a result of larger deductions and potential refunds. This will help households and the broader economy withstand at least some of the impact of the oil price shock and additional fallout of the current war.
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.
More findings below.
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 March, released on March 31, shows:
- The Conference Board’s Consumer Confidence Index rose 0.8 point in March to 91.8, from 91.0 in February.
- The Present Situation Index rose by 4.6 points to 123.3.
- The Expectations Index fell by 1.7 points to 70.9.
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, April 28.
The New York Fed will release its next Survey of Consumer Expectations on Tuesday, April 7.
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