US consumer sentiment plunges over tariff and inflation fears CNN Business

She is a financial therapist and transformational coach, with a special interest in helping women learn how to invest. Kate Gibson is a reporter for CBS MoneyWatch in New York, where she covers business and consumer finance. In an interview with Fox News’ Sean Hannity that aired Tuesday, Trump said “inflation is back,” blaming the latest uptick on government spending during the Biden administration. To be fair, Trump doesn’t shoulder much of the blame, since he occupied the Oval Office for less than half of the days covered by the latest inflation report. The Consumer Sentiment Index rose to 67.9 in the August 2024 survey, up from 66.4 in July and below last August’s 69.4. Though Acciones paypal the measure is often prone to disparities between parties, survey officials said sentiment slumped across partisan lines along with virtually all demographics.

The Consumer Sentiment Index fell to 64.7 in the February 2025 survey, down from 71.7 in January and below last February’s 76.9. The Expectations Index fell to 64.0, down from 69.5 in January and below last February’s 75.2. It has come to be included in the larger index of Leading Composite Indicators published by the Bureau of Economic Analysis (BEA) through the Department of Commerce.

This growth, in turn, leads to greater interest from foreign investors, which results in the increased value of the dollar against other foreign currencies. Historically speaking, the value of the dollar has usually risen whenever the Michigan CSI has come in at a higher level than was anticipated and fallen when the index came in lower. About 60% of each monthly survey consists of new responses, and the remaining 40% is drawn from repeat surveys.

Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master’s in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem. The results are “a reflection of the Great Uncertainty around the economic policies put forward by the Trump administration,” commented Carl Weinberg at High Frequency Economics. “Consumer spending may become restrained by caution until the Trump economic agenda becomes clear.”

To calculate the CSI, first compute the relative scores (the percent giving favorable replies minus the percent giving unfavorable replies, plus 100) for each of the five index questions. Using the formula shown below, add the five relative scores, divide by the 1966 base period total of 6.7558, and add 2.0 (a constant to correct for sample design changes from the 1950s). The Consumer Sentiment Index rose to 70.1 in the September 2024 survey, up from 67.9 in August and above last September’s 67.8. Expectations fell 10% for Republicans, 24% for Democrats and 12% for independents, Hsu added.

Consumer sentiment reverses course, inches up as election landscape changes

They have now developed into an ongoing, nationally representative survey based on telephonic household interviews. The Index of Consumer Expectations (a sub-index of ICS) is included in the Leading Indicator Composite Index published by the U.S. Consumers are also now expecting elevated inflation to be a long-term issue, saying they expect prices will increase at an annual clip of 3.9% during the next five to 10 years, the biggest month-over-month jump since 1993, the survey found.

US Consumer Sentiment Sinks in March

• Economists had expected consumer confidence to hold relatively steady, according to financial-data company FactSet.
• That’s far higher than the Federal Reserve’s inflation goal of driving the annual rate down to 2%.
• Though the measure is often prone to disparities between parties, survey officials said sentiment slumped across partisan lines along with virtually all demographics.
• Unemployment expectations also became more favorable in September, with an increasing share expecting overall unemployment to fall during the next year.

The survey is now conducted by the Survey Research Center and consists of at least 600 interviews posed to a different cross-section of consumers in the continental U.S. each month. The survey questions consumers on their views of their lmfx review own personal finances, as well as the short-term and long-term state of the U.S. economy. Each survey contains approximately 50 core questions, and each respondent is contacted again for another survey six months after completing the first one. “Consumers from all three political affiliations are in agreement that the outlook has weakened since February.” Consumer sentiment is a key economic indicator that reflects how optimistic or pessimistic consumers feel about their financial situations and the economy as a whole.

• The Trump administration’s aggressive approach to tariffs is a key reason why attitudes about the economy are souring, according to various consumer surveys and polls.
• The University of Michigan’s Consumer Sentiment Index provides a month-to-month measurement of U.S. consumer confidence dating back to the mid-20th Century.
• “While there are some signs that consumers perceive a slight deterioration in labor market conditions, they do not expect substantial effects on the economy,” Hsu said.
• This creates financial uncertainty for consumers, leading them to cut back on discretionary spending and delay major purchases.
• The Fed aims for a 2% inflation target, but the current rising expectations may complicate its policy approach.

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The University of Michigan Consumer Sentiment Index (MCSI) is one of the most widely followed measures of consumer confidence, providing insights into spending behaviors and economic expectations. Expectations for personal finances and the short-run economic outlook both declined almost 10% in February, while the long-run economic outlook fell back about 6% to its lowest reading since November 2023. Sentiment fell for Democrats and Independents, but was unchanged for Republicans, reflecting ongoing disagreements on the consequences of new economic policies. “The klaxon of layoff headlines, a falling stock market and tariff fears were a big blow to consumer confidence in early March,” said Bill Adams, chief economist for Comerica Bank, in an email. “The pullback in confidence is becoming a real threat to consumer spending which, as is often repeated, accounts for two thirds of U.S. economic activity.” It’s a stunning about-face after American consumers and businesses grew hopeful (briefly) about the economy’s future following Trump’s election in November.

Consumer sentiment builds momentum as inflation continues to slow

The survey queries consumers on their views of their own personal finances, as well as the short-term and long-term state of the U.S. economy. The University of Michigan Consumer Sentiment Index is a consumer confidence measure released monthly by the University of Michigan. The expectations index for September is now 13% above a year ago and reflects greater optimism across a broad swath of the population. While sentiment remains below its historical average in part due to frustration over high prices, consumers are fully aware that inflation has continued to slow, said U-M economist Joanne Hsu, director of the surveys. The University of Michigan’s latest survey, released Friday, showed that US consumer sentiment declined in February for the second consecutive month, according to a final reading, down by a steep 10% from January. “Despite these improvements, 47% of consumers blamed high prices for eroding their personal finances, a sign that prices remain a top concern,” Hsu said.

Trump is also keeping 25% tariffs on Mexico and Canada on the table, as soon as next month, a move that economists say would likely stoke inflation. Sentiment this month was driven by a modest improvement in sentiment by Independents, as Democrats and Republicans offset each other almost perfectly; Democrats reported a 10% increase while Republicans posted an equally sized decline. The University of Michigan’s Consumer Sentiment Index provides a month-to-month measurement of U.S. consumer confidence dating back to the mid-20th Century. Following the January 31 announcement that tariffs on China, Canada and Mexico would be implemented, year-ahead inflation expectations immediately surged.

The five-year inflation expectation also climbed to 3.9%, its highest level since February 1993. About 40% of consumers spontaneously mentioned tariffs, up from 27% last month and less than 2% prior to the election, Hsu said. More importantly, consumers appear to be folding economic policy developments into their expectations on the trajectory of the economy. Companies that provide consumer goods often reap the initial fruits of improved consumer sentiment. Consumers who feel more confident about the economy generally also feel better about their employment prospects and are therefore more willing to buy houses, cars, appliances, and other items.

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Consumers anticipate inflation climbing at an annual rate of 4.9% during the next year, their highest expectations since 2022. The year-ahead economic outlook has risen for four consecutive months, with September’s gains reflected across age, income and education groups. A year ago, more than half of consumers expected bad times for the economy in the next year; now, that share is 28%.

The Federal Reserve, tasked with managing interest rates, keeps a close eye on consumer perceptions of prices because they can sometimes be self legacy fx review fulfilling, so if consumers expect inflation to pick up, they could modify their spending. With over two months remaining until the general election, economic expectations are subject to change as the election season progresses, she said. While the current conditions index fell a less severe 3.3%, the expectations measure for the future was off 15.3% on a monthly basis and 30% from the same period in 2024. Consumer sentiment took another hit in March as worries intensified over inflation and a slumping stock market, according to the University of Michigan’s latest sentiment survey released Friday.

The survey is based on telephone interviews that gather information on consumer expectations for the economy. The preliminary results show the index fell to 57.9, compared with 64.7 a month ago, according to the Friday report. The reading marks the lowest level since November of 2022, researchers that compile the data said. Economists had expected consumer confidence to hold relatively steady, according to financial-data company FactSet. The Surveys of Consumers is a rotating panel survey at the University of Michigan Institute for Social Research. It is based on a nationally representative sample that gives each household in the coterminous U.S. an equal probability of being selected.