US Consumer Sentiment Dips in March as Iran War Stokes Recession Fears
The United States is not in a recession, but it may be in a “recession.”
Although three months have passed, the University of Michigan Consumer Sentiment Index fell to 53.3 in March — down from its initial reading of 55.5 two weeks ago — and down from 56.6 in February and 57 this time last year. Among those surveyed, expectations for fuel prices have risen, and inflation forecasts have risen following the start of the Iran war on February 28.
Although sentiment fell across age groups and political parties, “middle- and high-income consumers and stockholders, weighed down by rising gas prices and volatile financial markets after the Iran conflict, showed a sharp decline,” according to Joanne Hsu, Michigan’s research director.
The university’s indicators are based on a survey of US households and score results compared to a 1966 baseline out of 100, meaning March’s reading is about 47 points below that historical benchmark. Consumer sentiment today is generally considered low by historical standards. It reached a record low of 50 in June 2022 and an all-time high of 112 in January 2000. The index has not exceeded 100 since February 2020, a month before the pandemic lockdown began.
How Do Americans Feel About the Economy Today?
An index of current economic conditions, which measures whether people feel financially better or worse than last year and whether now is a good or bad time to buy goods, fell to 55.8 in March. That’s down from 56.6 in February and from 63.8 last year.
ConnectOne Bank founder and CEO Frank Sorrentino said the low consumer outlook could reflect higher borrowing costs, lower inflation in certain sectors, or continued economic uncertainty.
“At the same time, if we look at what’s happening on the ground, the underlying economy still looks strong,” Sorrentino told USA TODAY. “Businesses work, people work, and things do not fall in a logical way.
Where Do Americans Predict The US Economy?
The consumer expectations index, which shows consumers’ prospects for their financial situation and the general economy in the near and long term, fell to 51.7 in March. That’s down from 56.6 in February and from 52.6 this time last year.
Expectations for next year’s inflation rose to 3.8% in March, from 3.4% in February, marking the biggest single-month increase since April 2025.
Fears of a US recession were already escalating before the release of this report. Chief Economist at Moody’s Analytics, Mark Zandi, said that “even before the recent disruptive events” in the Middle East, the firm’s model increased the probability of a startup in the next 12 months to 49%.
Reach Rachel Barber at [email protected] and follow her on X @rachelbarber_
This article first appeared in USA TODAY: US consumer sentiment eased in March as Iran war fueled recession fears.
Reporting by Rachel Barber, USA TODAY / USA TODAY
USA TODAY Network via Reuters Connect
