March 17: US consumer sentiment plunged to a nearly 2-1/2-year low in March and inflation expectations soared amid worries that President Donald Trump's sweeping tariffs, which have ignited a trade war, would boost prices and undercut the economy.
The deterioration in sentiment and inflation expectations reported by the University of Michigan Surveys of Consumers on Friday was across political party affiliation, with consumers saying "frequent gyrations in economic policies make it very difficult for consumers to plan for the future."
That mirrors similar concerns in some business surveys. The uncertainty created by Trump's on- and off-again tariffs as well as an escalation in trade tensions risks derailing the economic expansion. Fears of higher prices, which drove consumers' long-term inflation expectations to levels last seen in early 1993, create a challenge for Federal Reserve officials as they consider the next steps for monetary policy.
"The jury is back and the verdict is in. Trump 2.0 policies are harming the economy and the future prosperity of America," said Christopher Rupkey, chief economist at FWDBONDS.
"The consumer is frightened and sees sharply higher prices ahead despite the assurances from Washington that trade tariffs are good for the economy."
The University of Michigan said its Consumer Sentiment Index dropped to 57.9, the lowest level since November 2022, from a final reading of 64.7 in February. Economists polled by Reuters had forecast the index falling to 63.1. �"Reuters
