Consumer confidence was quietly ticking up. Then the bombs fell.

What the Survey Found

The University of Michigan's Consumer Sentiment Index dropped to 55.5 in March, down from 56.6 in February and slightly above the 55.0 forecast. The reading is 13% below a year ago and 21% below January 2025.

Survey director Joanne Hsu flagged something unusual in this month's data: the survey was split almost in half by timing. Interviews collected before the U.S. military action in Iran showed an improvement from February. Interviews taken during the nine days after the strikes erased those gains entirely.

Gas prices had the most immediate impact, Hsu said, though how far the price shock spreads to other goods remains uncertain.

Who Feels It Most

The drop cut across income levels, age groups, and political affiliations — which is notable. Sentiment shifts usually show up first among lower-income households. This one was broad.

Consumers' expectations for year-ahead inflation held at 3.4% in March, ending six straight months of declines. That stall matters. The Fed has been waiting for inflation expectations to keep falling before considering rate cuts. That window just got narrower.

About 46% of respondents said high prices are eroding their personal finances — a reading that has stayed above 40% for seven consecutive months.

The Number That Should Worry You

The index currently sits in the 2nd percentile of its entire history, going back to 1978. That means sentiment has been this low or lower only 2% of the time on record.

More pointedly, the current reading is below the level seen at the start of all six recessions since the survey began. That doesn't mean a recession is coming. But it does mean consumers aren't approaching this moment with confidence.

The next update drops March 27.