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US consumer sentiment tumbled in March as long-term inflation expectations hit the highest level in 32 years, underscoring worries that Donald Trump’s economic policies are hitting the economy.
The University of Michigan’s consumer sentiment index fell to a preliminary reading of 57.9 in March, marking the third consecutive monthly drop and the lowest reading since November 2022. Economists expected a smaller fall to 63.1 from 64.7 in February.
Inflation expectations one year ahead jumped to 4.9 per cent, their highest level since November 2022. Longer-term inflation expectations leapt to 3.9 per cent from 3.5 per cent, bringing them to their highest level since 1993, according to Bloomberg data.
The report comes just days before the Federal Reserve’s policy decision next Wednesday. Although chair Jay Powell said in January the central bank does “not need to be in a hurry” to adjust interest rates, policymakers are faced with mounting data showing concern among consumers and businesses as they grapple with the potential impact of the US imposing tariffs on trading partners and other Trump administration policies.
“Many consumers cited the high level of uncertainty around policy and other economic factors; frequent gyrations in economic policies make it very difficult for consumers to plan for the future, regardless of one’s policy preferences,” said UMich’s surveys of consumers director Joanne Hsu.
US stocks remained higher, but retreated from session highs as the sentiment survey was released. The S&P 500 was up 1.1 per cent in mid-morning trading.
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