Consumer sentiment was stagnant for the fourth straight month in March, according to the University of Michigan Surveys of Consumers.
The report’s three indexes all fell on a monthly basis but remained much higher than March 2023. The index for consumer sentiment fell 2 percent to 77.9 from 79.4 in February, but remains 22.3 percent higher than last March. The index for current economic conditions fell 4 percent to 79.3 last month from 82.5 in February, but was 15.8 percent higher than a year earlier. The index for consumer expectations fell a half-percent to 77 from 77.4 in February but was 27 percent higher than 60.6 in March 2023.
“Sentiment is essentially unchanged throughout the first quarter of 2024, remaining just above the midpoint between the pre-pandemic level of sentiment and the historic trough from June 2022,” said Surveys of Consumers Director Joanne Hsu. “This stability reflects a perception among consumers that the economy has been holding steady in its current state. As the election season progresses and debates over economic policy become more salient for consumers, their outlook for the economy could become more volatile in the months ahead.”
Year-ahead inflation expectations fell to 2.9 percent from 3 percent in February. CPI inflation increased at a higher-than-expected 3.5 percent last month, according to the Bureau of Labor Statistics. Inflation was up from 3.2 percent in February and reached its highest reading in six months.
Short-term inflation expectations have fallen within the 2.3 percent to 3 percent range for three straight months. Long-term inflation expectations fell to 2.8 percent from 2.9 percent, and remained higher than the 2.2 percent to 2.6 percent range in the two years before the pandemic.
Stagnant economic sentiments were also reflected in March’s Conference Board Consumer Confidence Index. The index was essentially unchanged at 104.7 in March, from 104.8 in February. The index tracking consumer assessments of current business and labor market conditions increased to 151 in March from 147.6 in February. The index based on consumers’ short-term outlooks for income, business and labor market conditions dropped to 73.8 from 76.3 in February. A reading below 80 in the short-term outlook often signals a recession, according to The Conference Board.