The University of Michigan Consumer Sentiment Index slipped to 55.5 in March 2026 from 56.6 in February, coming in slightly above market expectations of 55, according to preliminary estimates. This was the lowest reading in three months, as households reacted to the escalating military conflict involving the US and Iran.
The most immediate impact on consumers stemmed from higher gasoline prices, though the broader passthrough to other prices remains uncertain. Respondents across income levels, age groups, and political affiliations reported a deterioration in their outlook for personal finances, which declined 7.5% nationwide.
Year-ahead inflation expectations held steady at 3.4%, halting a six-month streak of declines, while long-term inflation expectations edged down to 3.2% from 3.3%. The survey was conducted between February 17 and March 9. Survey director Joanne Hsu noted that sentiment weakened and inflation expectations firmed following the onset of the US military conflict with Iran on February 28.
