Consumer sentiment fell 6% this month for its lowest reading since December 2025, according to the University of Michigan Surveys of Consumers.
These declines were seen across age and political party. Consumers with middle and higher incomes and stock wealth, who are buffeted both by escalating gas prices and volatile financial markets, exhibited particularly large drops in sentiment.
"At this time, consumers appear to believe that any negative economic consequences of the Iran conflict are likely to be limited primarily to the short run," said U-M economist Joanne Hsu, director of the surveys. "These views are subject to change, however, if the conflict becomes protracted or if higher energy prices lead to meaningful, sustained increases in the prices consumers pay."
Interviews for this release were collected between Feb. 17 and March 23, with about two-thirds completed after the start of the U.S. military conflict in Iran.
Consumers expect gas price spikes to continue
Year-ahead gas price expectations surged about fivefold from last month, reaching its highest reading since June 2022, soon after Russia's invasion of Ukraine and the peak of post-pandemic inflation.
"Long-run gas price expectations were just a touch higher than the year-ahead reading, suggesting that consumers do not necessarily expect short-term spikes to persist," Hsu said. "Five-year gas price expectations increased as well, but remain near their historical average. At this time, consumers expect at least a short-term shock to prices at the pump with limited long-term increases for gas prices."
Outlook sours for various domains of the economy
Consumers perceived meaningful declines in the trajectory of multiple dimensions of the economy.
Year-ahead expectations for personal finances fell 10%, while one-year expected business conditions plunged 14%. About 61% of consumers expect unemployment to rise in the year ahead, up from 58% last month.
"Generally speaking, expectations for longer time horizons saw more modest declines than for the short run," Hsu said. "The persistence of high prices continues to be the dominant factor for consumer views of the economy, with 47% of consumers providing unsolicited comments that prices are weighing down their personal finances."
Consumer Sentiment Index
The Consumer Sentiment Index fell to 53.3 in the March 2026 survey, down from 56.6 in February and below last March's 57.0. The Current Index fell to 55.8, down from 56.6 in February and below last March's 63.8. The Expectations Index fell to 51.7, down from 56.6 in March and below last March's 52.6.
About the surveys
The Surveys of Consumers is a rotating panel survey at the University of Michigan Institute for Social Research. It is based on a nationally representative sample that gives each household in the coterminous U.S. an equal probability of being selected. Interviews are conducted throughout the month by web. The minimum monthly change required for significance at the 95% level in the Sentiment Index is 4.8 points; for the Current Economic Conditions Index and Index of Consumer Expectations, the minimum is 6 points.
About ISR
Established in 1949, the Institute for Social Research at the University of Michigan is among the world's oldest social science research organizations and a world leader in the development and application of social science methodology. ISR conducts some of the most widely cited surveys and studies in the nation, including the University of Michigan Surveys of Consumers, American National Election Studies, Monitoring the Future Study, Panel Study of Income Dynamics, Health and Retirement Study, National Survey of Black Americans and World Values Survey. ISR is also home to the Inter-University Consortium for Political and Social Research, which maintains the world's largest computerized social science data archive.
