Consumer Sentiment: Quick Drop

Bottom Line:  Consumer sentiment fell sharply in the first half of March, according to the University of Michigan survey, dropping even before the news of bank failures. 85% of survey responses were collected before the SVB bank failure. Declining for the first time in four months, sentiment fell for the lowest and the highest-income households, as lower-income families struggled with persistently high consumer prices and higher-income households worried about their equity holdings. On the plus side, year-ahead inflation expectations hit 3.8%, their lowest levels since April 2021. And long-term inflation expectations dropped to 2.8%, below the recent 2.9-3.2% range. Overall, consumer sentiment remained historically low even before the bank failures, likely pushing sentiment lower since this survey.

The University of Michigan's Consumer Sentiment Index FELL -3.6  to 63.4, BELOW the 3-month average of 65.1 but 6.7% ABOVE the year-ago level.
 
The Current Conditions Index FELL -4.3  to 66.4, BELOW the 3-month average of 68.5 and -1.2% BELOW the year-ago level.
 
The Future Expectations Index FELL -3.2  to 61.5, BELOW the 3-month average of 62.97 but 13.3% ABOVE the year-ago level.
 
Year-ahead inflation expectations FELL -0.3  to 3.8, BELOW the 3-month average of 3.93 and -1.6 BELOW the year-ago level.
 
Long-term (5 years) inflation expectations FELL -0.1  to 2.8, BELOW the 3-month average of 2.87 and -0.2 BELOW the year-ago level.