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Consumer sentiment fell for a third month in a row in March, declining nearly 12% from February to an index reading of 57.0. The expectations index also plunged nearly 18% to 52.6. Sentiment declined across all demographic and political groups, with all groups expressing anxiety over their personal finances, business conditions, unemployment and inflation. Two-thirds of consumers anticipate unemployment will rise in the next year, the highest reading since 2009. This is notable because in recent years, strong labor markets and incomes have been the primary reason for continued durability in consumer spending.

Year-ahead inflation expectations surged for a third consecutive month in March from 4.3% to 5.0%, the highest reading since November 2022 and well above the pre-pandemic range of 2.3–3.0%. Long-run inflation expectations also soared from 3.5% to 4.1%, led by a notable rise in concerns from independents and some Republicans. Overall, aggregate sentiment has been led by independents’ views, and thus not swung by polarization across the two major parties.