American consumer sentiment deteriorated this month as oil prices surged following the war between the United States, Israel, and Iran.
The University of Michigan announced on March 13 (local time) that its Consumer Sentiment Index fell 1.1 points to 55.5 in March from 56.6 in February. This marks the lowest reading of the year. While the current economic conditions index improved from 56.6 in February to 57.8 in March, the consumer expectations index worsened from 56.6 to 54.1. The university noted that the survey was conducted from February 17 through March 9, with roughly half of responses collected before the Iran war began on February 28.
American consumers' one-year inflation expectations held steady at 3.4%. Five-year inflation expectations declined to 3.2% from 3.3% a month earlier.
Joanne Hsu, director of the University of Michigan's consumer sentiment survey, said responses collected after the U.S. attack on Iran showed higher inflation expectations. "Surveys completed before the Iran attack showed improved consumer sentiment compared to the previous survey, but responses collected through the 9th of this month showed deterioration," she noted. She added, "Consumers immediately felt the impact of rising gasoline prices, but there is significant uncertainty about how much price increases will pass through to other goods."