University of Michigan's Index of Consumer Sentiment posts preliminary March level of 59.7, down from February's 62.8; decline reflects falling inflation-adjusted incomes, rising fuel prices due to the Russian invasion of Ukraine

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March 11, 2022 (press release) –

Preliminary Results for March 2022

                                                       Mar     Feb      Mar       M-M          Y-Y
                                                      2022    2022    2021    Change   Change
Index of Consumer Sentiment        59.7    62.8     84.9     -4.9%      -29.7%
Current Economic Conditions         67.8    68.2     93.0     -0.6%      -27.1%
Index of Consumer Expectations    54.4    59.4     79.7     -8.4%      -31.7%

Next data release: Friday, March 25, 2022 for Final March data at 10am ET

Read our January 12th report: The Partisan Economy

Read Dr. Curtin's latest paper, Nonconscious cognitive reasoning: A neglected ability shaping economic behavior.
Surveys of Consumers chief economist, Richard Curtin
Consumer Sentiment continued to decline due to falling inflation-adjusted incomes, recently accelerated by rising fuel prices as a result of the Russian invasion of Ukraine. The year-ahead expected inflation rate rose to its highest level since 1981, and expected gas prices posted their largest monthly upward surge in decades. Personal finances were expected to worsen in the year ahead by the largest proportion since the surveys started in the mid-1940s. Consumers held very negative prospects for the economy, with the sole exception of the job market. Consumers were slightly more likely to anticipate declines rather than increases in the national unemployment rate. This underlying strength in jobs comes at the cost of pushing inflation even higher due to unrelenting pressures on aggregate demand and supply lines. The persistent strength in demand was a critical factor that shaped the last inflationary age from 1965 to 1982, with stagflation peaking only near its end. Current expectations are consistent with heightened pressures on wages to meet the continued growth in demand. Like the game of musical chairs, everyone continues racing around the circle of rising prices and higher wages. Although everyone knows the game will end, everyone still wants to obtain the highest income possible before they exit. The game is moderated by fiscal and monetary policies, which now favor increased federal spending and full employment over price stability, enabling ever more rounds of the game.

The greatest source of uncertainty is undoubtedly inflation and the potential impact of the Russian invasion of Ukraine. In the March survey, 24% of all respondents spontaneously mentioned the Ukraine invasion in response to questions about the economic outlook. The impact of this recognition was associated with a drop of 13.2 Index points in the Index of Consumer Expectations across all households. The difference was much larger for those who held higher inflation expectations: the difference was 33.5 Index-points on the Expectations Index for those who expected under 5% compared with over 5%.

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