The United States is not in a recession, but it may be in a “vibecession.”
Despite ticking up for the past three months, the closely watched University of Michigan Consumer Sentiment Index fell to 53.3 in March — lower than its preliminary estimate of 55.5 two weeks ago — and down from 56.6 in February and 57 this time last year. Of those surveyed, expectations for gas prices surged, and inflation predictions rose following the start of the Iran war on Feb. 28.
While sentiment declined across age groups and political affiliations, “consumers with middle and higher incomes and stock wealth, buffeted by both escalating gas prices and volatile financial markets in the wake of the Iran conflict, exhibited particularly large drops,” according to Joanne Hsu, director of the Michigan surveys.
The university’s indexes are based on a survey of U.S. households and score results against a 1966 baseline of 100, meaning the March reading is about 47 points below that historical benchmark. Consumer sentiment today is generally considered low by historical standards. It hit a record low of 50 in June 2022 and an all-time high of 112 in January 2000. The index has not surpassed 100 since February 2020, the month before pandemic lockdowns began.
How Do Americans Feel About the Economy Today?
The index of current economic conditions, which measures if people feel financially better or worse off than they were a year ago and whether now is a good or bad time to buy goods, dipped to 55.8 in March. That’s down from 56.6 in February and from 63.8 a year ago.
ConnectOne Bank Founder and CEO Frank Sorrentino said low consumer sentiment may be a reflection of higher borrowing costs, lingering inflation in certain categories, or persistent economic uncertainty.
“At the same time, when we look at what’s actually happening on the ground, the underlying economy still appears relatively resilient,” Sorrentino told USA TODAY. “Businesses are operating, people are working, and activity hasn’t fallen off in a meaningful way. So, what we’re seeing is a bit of a disconnect between how people feel and what they’re doing.”
Where Do Americans Predict the US Economy Is Headed?
The index of consumer expectations, which reflects consumers’ prospects for their own financial situation and the general economy over the near and long term, fell to 51.7 in March. That’s down from 56.6 in February and from 52.6 this time last year.
Year-ahead inflation expectations rose to 3.8% in March, up from 3.4% in February, marking the largest one-month increase since April 2025.
U.S. recession fears were already on the rise ahead of the report’s release. Moody’s Analytics Chief Economist Mark Zandi said in a note that “even before the recent disconcerting events” in the Middle East, the firm’s model had raised the probability of one starting in the next 12 months to an “uncomfortably high” 49%.
Reach Rachel Barber at [email protected] and follow her on X @rachelbarber_
This article originally appeared on USA TODAY: US consumer sentiment dips in March as Iran war stokes recession fears
Reporting by Rachel Barber, USA TODAY / USA TODAY
USA TODAY Network via Reuters Connect
