Consumer confidence in the economy waned slightly this month, although the majority still believes that inflation will continue to decline, indicating a potential slowdown in price hikes.
The University of Michigan’s preliminary consumer sentiment index for March fell to 76.5, just below February’s 76.9. Since January, Americans’ outlook has remained relatively stable after a significant increase. The current sentiment level is between its lowest point in June 2022, during the peak of inflation, and its pre-pandemic averages.
The public’s perception of the economy is expected to be a significant factor in the upcoming presidential race, likely focusing heavily on evaluations of President Joe Biden’s economic performance.
This consumer sentiment report comes after this week’s inflation data, which showed that prices continued to rise at a pace exceeding the Federal Reserve’s 2% target for the second consecutive month. In February, the consumer price index increased by 3.2% compared to a year ago, up from 3.1% in January.
Despite these inflation concerns, the University of Michigan survey indicated that Americans’ expectations for future inflation have not changed significantly from February. Consumers anticipate a 3% inflation rate over the next year, consistent with the previous month. For the next five to ten years, they expect inflation to average 2.9%, also unchanged from February. While these figures exceed the Fed’s target, they are only slightly higher than pre-pandemic levels.
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