Consumer sentiment slumped again in March, hitting its lowest level since August 2011, the University of Michigan reported Friday.
High inflation, volatile oil prices, geopolitical unrest and, now rising interest rates, have left consumers with a bitter taste about the state of the US economy.
The March index was revised down to 59.4 from a preliminary reading of 59.7 released two weeks ago, when rising prices and the Russia-Ukraine conflict were already spurring unease among consumers. In March 2021, the consumer sentiment index was 84.9.
Consumers are battling the highest inflation since 1982 and with it, a barrage of rising costs: Mortgage rates increased again this week, bringing the traditional 30-year fixed rate to 4.42%, adding an average of $300 a month for homebuyers. Gas prices are still at record highs in parts of the country, and the latest Consumer Price Index showed most essential goods are up by 7.9% year on year.
Last week, the Federal Reserve said it would raise rates for the first time since 2018 to help rein in the spiraling inflation. While that may help the economy cool off, it’s an additional burden for many households, especially families on a fixed income.
“Inflation has been the primary cause of rising pessimism, with an expected year-ahead inflation rate at 5.4%, the highest since November 1981,” said Richard Curtin, chief economist for the University of Michigan Surveys of Consumers. “Inflation was mentioned throughout the survey, whether the questions referred to personal finances, prospects for the economy, or assessments of buying conditions.