University of Michigan's Index of Consumer Sentiment posts final March reading of 59.4, down from February's 62.8; rising pessimism due to continued inflationary pressures, reduced living standards

March 25, 2022 (press release) –

Final Results for March 2022

                                                      Mar      Feb     Mar        M-M          Y-Y
                                                     2022    2022    2021    Change    Change
Index of Consumer Sentiment      59.4     62.8     84.9      -5.4%      -30.0%
Current Economic Conditions       67.2     68.2     93.0      -1.5%      -27.7%
Index of Consumer Expectations  54.3     59.4     79.7      -8.6%      -31.9%

Next data release: Thursday, April 14, 2022 for Preliminary April 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 remained largely unchanged in late March at the same diminished level recorded at mid month. Inflation has been the primary cause of rising pessimism, with an expected year-ahead inflation rate at 5.4%, the highest since November 1981. Inflation was mentioned throughout the survey, whether the questions referred to personal finances, prospects for the economy, or assessments of buying conditions. When asked to explain changes in their finances in their own words, more consumers mentioned reduced living standards due to rising inflation than any other time except during the two worst recessions in the past fifty years: from March 1979 to April 1981, and from May to October 2008. Moreover, 32% of all consumers expected their overall financial position to worsen in the year ahead, the highest recorded level since the surveys started in the mid-1940s. The combination of rising prices and less positive income expectations meant that half of all households anticipated declines in inflation-adjusted incomes in the year ahead. The sole area of the economy about which consumers were still optimistic was the strong job market. Consumers anticipated in March that during the year ahead it was more likely that the unemployment rate would post further declines than increases (30% versus 24%).

Strong job growth will continue to put upward pressures on wages, resulting in higher income and stronger job prospects. This strength will then act to expand consumer demand and ultimately lead to another cycle of price and wage increases. These factors represent the necessary (but not sufficient) conditions for the development of inflationary psychology as a self-fulfilling prophecy. Prevention of inflationary psychology is much less costly before it becomes ingrained in the economic behavior of consumers and firms. Confidence that economic policies will resolve the problem is essential. Unfortunately, half of all consumers unfavorably assessed current policies, more than three times the 16% who rated them favorably. Making the situation even more difficult, policy makers need to take account of two unusual sources of economic uncertainty, one rather minor (the new covid variant), and a major source of continued economic disruption (the Russian invasion of Ukraine).