Consumer Sentiment Firms, but Expectations Slide and Inflation Fears Build
Consumer confidence inched up 0.8 points in March to 91.8. Among its components, the Present Situation Index improved while the Expectations Index declined as customers’ concerns regarding the present situation eased and concerns about the future worsened.
The Present Situation Index, reflecting current business and labor market conditions, rose 4.6 points to 123.3. Meanwhile, the Expectations Index, which reflects customers’ short-term outlook for income, business and labor market conditions, decreased 1.7 points to 70.9, remaining below the recession signal threshold of 80 since February 2025.
Views of the current labor market situation were virtually unchanged, with 27.3% of consumers saying jobs were “plentiful,” up slightly from February (26.7%), while 21.5% said jobs were “hard to get,” also up slightly from February (21.0%). Looking to the future, 15.4% said they expect more jobs to be available, down from 16.0% the prior month, while 27.9% anticipate fewer jobs, up from 26.2% the previous month.
Mentions of high prices and inflation continued to top the list of topics influencing consumers’ views of the economy. At the same time, mentions of energy prices and the conflict in Iran picked up, while mentions of trade decreased meaningfully in March. Consumers’ 12-month inflation expectations jumped to their highest levels since August 2025, and the proportion of consumers expecting higher interest rates surged. At the same time, the share of consumers who believe a recession is “very likely” over the next year rose, but the small share thinking the economy is already in a recession was virtually unchanged.
Buying plans for cars, with a clear preference for used cars, rose in March, but purchasing plans for homes softened slightly. Meanwhile, consumers’ plans for buying other big-ticket items declined. At the same time, consumers’ intentions to purchase more services fell for every category in March. Despite declining, restaurants, bars and take-out remained the top planned service spending category in March. Overall, consumers’ views of their current financial situation strengthened slightly in March, while views of their future financial situation worsened.